Etfl Industry Review Jul10 Us

Industry Review from BlackRockJuly 2010

FOR INSTITUTIONAL USE - NOT FOR PUBLIC DISTRIBUTION

ETF LandscapeA review of the Exchange Traded Funds (ETFs) and Exchange Traded Products (ETPs) industry

ETF Landscape Industry Review End of July 2010

This document is not an offer to buy or sell any security or to participate in any trading strategy. Please refer to important information and qualifications at the end of this material. 1

TABLE OF CONTENTS Current ETF and ETP landscape Page 02

Global ETF and ETP asset growth Page 11

Global ETF and ETP providers Page 14

Global mutual fund assets and flows 3

Global ETF fund flows Page 24 ETFs in the United States Page 25

US listed ETF and ETP asset growth Page 26

US ETF and ETP providers Page 27

Top 10 ETFs by AUM, trading volume and change in AUM Page 28

US mutual fund assets and flows Page 29

US ETF fund flows Page 30

Average expenses of ETFs versus open-end mutual funds Page 31

US ETF and ETP net new assets by type of exposure Page 36

US exchange turnover Page 38

Short Interest Page 39 ETFs in Europe Page 40

European listed ETF and ETP asset growth Page 41

European ETF and ETP providers Page 42

European ETF and ETP net new assets by type of exposure Page 46

European mutual fund assets and flows Page 48

European ETF fund flows Page 49

Average expenses of ETFs versus open-end mutual funds Page 50

European exchange ETF statistics Page 51 ETFs in Canada Page 52

Canadian listed ETF asset growth Page 53

ETF providers in Canada, ETFs by AUM and trading volume Page 53

Canadian ETF assets by type of exposure Page 54 ETFs in Asia Pacific (ex-Japan) Page 55

Asia Pacific (ex-Japan) listed ETF and ETP asset growth Page 56

Asia Pacific (ex-Japan) ETF providers Page 56

Asia Pacific (ex-Japan) mutual fund and ETF fund flows Page 59 ETFs in Japan Page 60

Japanese listed ETF and ETP asset growth and ETF providers in Japan Page 62

Japanese mutual fund and ETF fund flows Page 63 ETFs in the Middle East and Africa Page 64

ETF providers in the Middle East and Africa Page 64

Middle East and Africa listed ETF and ETP asset growth Page 65 ETFs in Latin America Page 66

ETF Providers in Latin America Page 66

Latin America ETF and mutual fund asset growth Page 67 Implementing Asset Allocation with ETFs Page 69

Macro asset allocation and Index performance Page 71

Core/satellite applications Page 73

How can ETFs be used and why use ETFs? Page 74

The ETF toolbox Page 75

Commodity index comparison Page 80 US ETF & US ETP Launches 2010 Page 84

GLOBAL ETF RESEARCH AND IMPLEMENTATION STRATEGY TEAM Deborah Fuhr Managing Director Global Head of ETF Research and Implementation Strategy +44 20 7668 4276 [email protected]

Shane Kelly Vice President Global ETF Research and Implementation Strategy +44 20 7668 8426 [email protected]



This is our end of July 2010 version of the ETF Landscape – Industry Review: BlackRock’s comprehensive monthly market commentary, which covers Exchange Traded Funds (ETFs) and other Exchange Traded Products (ETPs) across the globe. ETFs are typically open-end index funds1 that provide daily portfolio transparency, are listed and traded on exchanges like stocks on a secondary basis as well as utilising a unique creation and redemption process for primary transactions. ETPs are products that have similarities to ETFs in the way they trade and settle but they do not use a mutual fund structure. The use of other structures including grantor trusts, partnerships, notes and commodity pools by ETPs can create different tax and regulatory implications for investors when compared to ETFs which are funds. This document includes rankings of ETF and ETP providers, ETFs, index providers and exchanges globally, in the United States, Europe, Japan, Asia, Latin America, the Middle East and Africa, as well as by country. This commentary should not be regarded as a research report2.

Current ETF and ETP landscape, as at end July 2010

Global

• At the end of July 2010 the global ETF industry had 2,282 ETFs with 4,872 listings, assets of US$1,095.2 Bn, from 124 providers on 42 exchanges around the world.

• YTD assets increased by 5.7%, compared to the the 3.7% decrease in the MSCI World Index in US dollar terms.

• The top 100 ETFs, out of 2,282, account for 63.9% of global ETF AUM, while 1,187 ETFs have less than US$50.0 Mn in assets and 457 ETFs have less than US$10.0 Mn in assets.

• YTD the number of ETFs increased by 17.3% with 368 new ETFs launched, while 33 ETFs were delisted.

• The number of ETFs listed in Europe surpassed the US in April 2009, now with 969 ETFs listed in Europe, compared to 866 in the US at end July 2010.

• There are currently plans to launch 970 new ETFs. • YTD the number of exchanges with official listings increased from

40 to 42. • YTD the average daily trading volume in US dollars increased by

30.9% to US$66.4 Bn. • MSCI ranks first in terms of ETF AUM tied to its benchmarks with

assets of US$263.9 Bn and 323 ETFs, while Standard & Poor’s (S&P) ranks second with US$244.3 Bn and 277 ETFs, followed by Barclays Capital with US$110.3 and 78 ETFs.

• Globally, iShares is the largest ETF provider in terms of both number of products, 453 ETFs, and assets of US$506.8 Bn, reflecting 46.3% market share; State Street Global Advisors is second with 110 products and US$153.3 Bn, 14.0% market share; followed by Vanguard with 47 products and assets of US$113.1 Bn and 10.3% market share at the end of July 2010.

• The top three ETF providers, out of 124, have 70.6% market share. • Globally, net sales of mutual funds (excluding ETFs) were minus

US$283.3 Bn, while net sales of ETFs were positive US$71.3 Bn during the first six months of 2010 according to Strategic Insight.

• Additionally, there were 849 other Exchange Traded Products (ETPs) with 1,415 listings and assets of US$128.6 Bn from 47 providers on 20 exchanges.

1 Most are index-based, but some are active. 2 Certain terms used in this publication may differ from those applied

by other industry participants.

• Combined, there were 3,131 products with 6,287 listings, assets of US$1,223.7 Bn from 150 providers on 45 exchanges around the world at the end of July 2010.

United States

• At the end of July 2010 the US ETF industry had 866 ETFs, assets of US$741.3 Bn, from 30 providers on two exchanges.

• YTD assets increased by 5.1%, compared to the 1.3% decrease in the MSCI US Index in US dollar terms.

• In July 2010, US domiciled ETFs/ETPs experienced net inflows totalling US$9.6 Bn. Equities saw US$7.3 Bn net inflows, of which US$4.2 Bn went into Emerging Markets equities and US$2.7 Bn into North American equities. Fixed Income ETFs/ETPs saw net inflows of US$4.6 Bn, of which US$1.4 Bn went into Government bond exposures and US$1.1 Bn into Corporates. Commodities experienced US$2.2 Bn net outflows, of which US$1.7 Bn was from net redemptions of Precious Metals in July 2010.

• YTD US domiciled ETFs/ETPs experienced net inflows totalling US$50.0 Bn. Fixed Income ETFs/ETPs saw net inflows of US$25.1 Bn, of which US$9.4 Bn went into Government bond exposures and US$5.0 Bn into Aggregate exposure. Equities saw US$18.9 Bn net inflows, of which US$9.4 Bn went into Emerging Markets equities and US$5.2 Bn to North American equities. Commodities saw US$6.9 Bn net inflows, of which US$8.3 Bn went into Precious metals while Energy ETFs/ETPs saw net outflows of US$1.2 Bn YTD.

• In July 2010, US domiciled ETFs experienced net inflows totalling US$10.9 Bn. iShares gathered the largest inflows with US$6.6 Bn, followed by Vanguard with US$2.8 Bn net inflows, while Van Eck Associates Corp saw US$0.3 Bn net outflows in July 2010.

• YTD US domiciled ETFs experienced net inflows totalling US$45.0 Bn. Vanguard gathered the largest inflows with US$19.9 Bn, followed by iShares with US$17.3 Bn net inflows, while State Street Global Advisors saw US$5.2 Bn net outflows YTD.

• The top 100 ETFs, out of 866, account for 83.5% of US ETF AUM, while 390 ETFs have less than US$50.0 Mn in assets and 156 ETFs have less than US$10.0 Mn in assets.

• YTD the number of ETFs increased by 12.2% with 117 new ETFs launched, while 23 ETFs were delisted.

• YTD the average daily trading volume in US dollars has increased by 34.2% to US$61.5 Bn.

• In July 2010, US ETF turnover was 27.3% of all US equity turnover, greater than the 24.7% in December 2009.

• The top three ETF providers, out of 30, have 85.5% market share.

• The average Total Expense Ratio (TER) for equity ETFs in the US is 34 bps versus 93 bps per annum for the average equity index tracking fund and 146 bps for the average active equity fund.2

• In the US net sales of mutual funds (excluding ETFs) were minus US$331.0 Bn, while net sales of ETFs domiciled in the US were positive US$38.8 Bn during the first six months of 2010 according to Strategic Insight.

• In the United States over the last five years, to year end 2009, the S&P 500 has outperformed 60.8% of actively managed large-cap US equity funds; the S&P MidCap 400 has outperformed 77.2% of mid-cap funds and the S&P SmallCap 600 has outperformed 66.6% of small-cap funds according to S&P. The five-year data results are similar for actively managed fixed income funds. Across all categories, with the exception of emerging market debt, more than 70% of active managers have failed to beat benchmarks3.

• Additionally, there were 151 other Exchange Traded Products (ETPs) with assets of US$93.6 Bn from 18 providers on one exchange.

• Combined, there were 1,017 products with assets of US$834.9 Bn from 44 providers on two exchanges in the US.

3 Source: Standard & Poor’s Indices Versus Active Funds (SPIVA) Scorecard, Year-End 2009. Source: Various ETF Providers, Exchanges, Global ETF Research and Implementation Strategy Team, BlackRock.



Europe

• At the end of July 2010 the European ETF industry had 969 ETFs with 3,117 listings, assets of US$236.3 Bn, from 35 providers on 18 exchanges.

• YTD assets have increased by 4.2% from US$226.9 Bn to US$236.3 Bn, compared to the 8.7% fall in the MSCI Europe Index in US dollar terms.

• In July 2010, net new assets into European domiciled ETFs/ETPs totalled US$2.3 Bn. Equities gathered US$1.3 Bn net inflows, of which US$0.6 Bn went into Emerging Markets equities and US$0.4 Bn into Global equities. Fixed Income saw net inflows of US$1.0 Bn, of which US$0.9 Bn went into Government bond exposures and US$0.5 Bn into Corporates, while ETFs/ETPs with Inflation exposure saw net outflows of US$0.5 Bn. Commodities saw net outflows of US$0.01 Bn, of which US$0.2 Bn was from net redemptions of Precious Metals while ETFs/ETPs with Energy exposure saw net inflows of US$0.1 Bn. Currency ETFs/ETPs saw net inflows of US$0.1 Bn in July 2010.

• YTD net new assets into European domiciled ETFs/ETPs totalled US$26.8 Bn. Equities gathered US$13.4 Bn net inflows, of which US$5.1 Bn went into Emerging Markets equities and US$2.9 Bn to North American equities. Fixed Income saw US$6.8 Bn net inflows, of which US$6.2 Bn went into Government bond exposures and US$1.6 Bn to Corporates. Commodities saw US$5.8 Bn net inflows, of which US$4.4 Bn went into Precious Metals and US$0.6 Bn into Broad commodity exposure YTD.

• In July 2010, net new assets into European domiciled ETFs totalled US$2.4 Bn. iShares has received the largest inflows with US$1.2 Bn, followed by Credit Suisse Asset Management with US$0.3 Bn net inflows and ETFlab Investment with US$0.2 Bn net inflows in July 2010.

• YTD net new assets into European domiciled ETFs totalled US$24.2 Bn. iShares has received the largest inflows with US$5.5 Bn net new assets, followed by Lyxor Asset Management with US$3.3 Bn net inflows, and Source Markets with US$3.2 Bn net inflows YTD.

• The top 100 ETFs, out of 969, account for 66.5% of European ETF AUM, while 506 ETFs have less than US$50.0 Mn in assets and 166 ETFs have less than US$10.0 Mn in assets.

• YTD the number of ETFs increased by 17.2% with 150 new ETFs launched, while eight ETFs were delisted.

• YTD the number of exchanges with official listings remains at 18.

• YTD the average daily trading volume in US dollars increased by 11.6% to US$3.0 Bn. Most ETF trades are not required to be reported in Europe as ETFs are not covered by the European Union directive on markets in financial instruments (MiFID).

• In July 2010, reported European ETF turnover was 9.5% of all European equity turnover, greater than the 8.4% in December 2009.

• The top three ETF providers, out of 35, have 71.5% market share.

• The average Total Expense Ratio (TER) for equity ETFs in Europe is 40 bps versus 91 bps per annum for the average equity index tracking fund and 180 bps for the average active equity fund1.

• In Europe net sales of mutual funds (excluding ETFs) were US$55.2 Bn while net sales of ETFs domiciled in Europe were US$21.2 Bn during the first six months of 2010 according to Lipper FMI.

• Additionally, there were 380 other Exchange Traded Products (ETPs) with 879 listings and assets of US$18.8 Bn from nine providers on six exchanges.

• Combined, there were 1,349 products with 3,996 listings and assets of US$255.1 Bn from 39 providers on 18 exchanges in Europe.

The challenging market conditions of 2008 caused a significant shift in investors’ risk appetite in their evaluation of counterparty risk and their desire for liquidity. During 2009 many investors turned to ETFs to help meet their desire for greater transparency in relation to the issues of

1 Source: Morningstar, March 2010.

cost, transparency of holdings, transparency of price, liquidity, product structure, risk and return as they relate to investment alternatives.

ETFs are index-based2 open-ended funds that can be bought and sold as quickly and easily as ordinary shares on a stock exchange – they have become popular and widely used investment vehicles to achieve many investment strategies:

• to gain diversified exposure to a market

• for core/satellite investing

• for buy and hold investing

• for active traders who wish to take advantage of market movements

• for investors wishing to hedge the market

• as an alternative to futures and other institutional investment tools.

All financial investments involve an element of risk. Therefore, the value of an investment in ETFs and the income from it will vary and the initial investment amount cannot be guaranteed.

In a world where investment products come and go with the blink of an eye, ETFs might be considered one of the most innovative financial products in the last two decades. They have fundamentally changed how both institutional and retail investors construct their investment portfolios.

ETF providers have continued to expand their product ranges in more specialised areas to cater for the growing number of professional and retail investors using ETFs as advanced portfolio construction tools. The increasing availability of these highly-specialised ETFs across the full spectrum of equities, fixed income and alternative investments now ensures that investors can use ETFs to instantly reallocate capital to take advantage of new investment opportunities.

Over the past decade through year end 2009 the compound annual growth rate for ETF assets globally was 56.3%, it was 58.1% in the United States, 53.1% in Canada and 90.5% in Europe, and there are no signs that investor interest in ETFs is fading. Investors are finding that ETFs are products that can work well in every market environment.

Capital flows in 2009 within ETFs also demonstrate how these innovative investment products have become important bellwethers to gauge shifts in investor sentiment between asset classes. During 2009, fixed income, equity and commodity-based ETFs enjoyed heavy inflows as some investors adjusted their risk profiles. At the start of 2009 given rising levels of risk aversion, ETFs tracking equity markets perceived as higher risk suffered much of the capital outflow, notably Asian and global (excluding US) equities.

The use of ETFs is often driven by macro trends and volatility. The changes in investor sentiment are illustrated in the net new asset data into ETFs tracking fixed income indices, equity indices, emerging market indices and commodities.

At the end of July 2010 just 100 ETFs, out of 2,282, accounted for US$700.2 Bn or 63.9% of the US$1,095.2 Bn total. ETFs providing exposure to key portfolio building blocks account for approximately a quarter of assets. There are 1,187 ETFs with assets below US$50.0 Mn and 457 ETFs with less than US$10.0 Mn in assets, while the top three providers out of 124 account for 70.6% of assets: iShares with 46.3%, SSgA 14.0% and Vanguard with 10.3% market share.

Additionally, there were 849 other Exchange Traded Products (ETPs) with assets of US$128.6 Bn from 47 providers on 20 exchanges. Combined, there were 3,131 products with 6,287 listings, assets of US$1,223.7 Bn from 150 providers on 45 exchanges around the world at the end of July 2010.

We have documented and discussed for many years the growing use of ETFs by institutional investors around the world. See ETF Landscape, Annual Review of Institutional Users of ETFs in 2008 report.

2 Most are index-based, but some are active. Source: Global ETF Research & Implementation Strategy Team, BlackRock, Bloomberg.



ETFs gain foothold in Institutional market In the United States, where ETFs are most commonly thought of as a retail product, institutional investors are finding that ETFs can be helpful tools for cash equitisation, transition management, rebalancing, and obtaining hard to achieve exposures. According to a recent survey by Greenwich Associates1, ETF use among US pension funds, endowments and foundations has grown to about 14%, according to the results of Greenwich Associates’ most recent annual study of the US investment management market. Despite that relatively modest share, institutions actually represent roughly half the assets invested in ETFs in the United States according to recent industry estimates. Almost half the institutional users in the Greenwich Associates annual study say they employ ETFs for what they consider ‘tactical’ tasks related to the management of their portfolios. Approximately 20% of institutional ETF users say they employ the funds to implement ‘strategic or long-term’ investment decisions, and an equal share report that they use ETFs for both tactical and strategic purposes. Figure 1: How ETFs are used by US Institutions

24%

24%

28%

31%

38%

45%

25%

25%

31%

19%

63%

31%

56%

3%

3%

6%

0% 20% 40% 60% 80% 100% 120%

Other

ETF overlay

Portfolio completion

Rebalancing

Core/satellite

Cash equitisation

Transitions

Tactical adjustments

Plan sponsors

Money managers

Note: Based on responses from 70 U.S. plan sponsors and money managers using ETFs. Source: 2010 Greenwich Market Pulse - ETFs

iShares/BlackRock biggest ETF provider to US Institutions Greenwich Associates asked the institutions participating in the survey to name the providers they use for ETFs. The results reveal two things: 1) iShares/BlackRock is by far the most widely used provider of ETFs

among US institutions, and 2) Most institutions that employ ETFs use more than one provider:

89% of institutional ETF users obtain ETFs from iShares/BlackRock, whereas 60% use SPDRs/State Street and 51% use Vanguard.

1 Greenwich Associates surveyed U.S. pension funds, endowments, foundations, and money

managers that identified themselves as ETF users. Seventy institutions participated in the survey, including 43 plan sponsors and 27 money managers. The survey was conducted from 8 March to 16 March 2010.

Figure 2: ETF providers/products currently used iShares/BlackRock 89%

SPDRs/State Street 60%

Vanguard 51%

ProShares 13%

BLDRs/PowerShares/INVESCO 13%

Direxion 2%

Rydex 2%

Other 2% Note: Based on responses from 70 U.S. plan sponsors and money managers using ETFs. Source: 2010 Greenwich Market Pulse - ETFs

Institutions cite a range of criteria used in selecting an ETF provider. In addition to the obvious consideration of fees, institutions rank four factors as particularly important in selecting an ETF provider: liquidity, benchmark, the track record of the fund, and reputation of the company behind the fund. Conclusion: The future of ETFs in the institutional marketplace Almost 55% of institutions currently employing ETFs expect their usage of the product to increase in the next three years, including nearly 20% that expect the amount of assets dedicated to ETFs to grow by 5–10% in that period. Money managers are slightly more apt to predict an increase in use: Approximately 65% expect to be devoting more assets to ETFs in the next 12 months, compared with half of plan sponsors. About 20% of plan sponsors expect to reduce their use of ETFs. Figure 3: Expected change in asset allocation to ETFs

-5%

-3%

-8%

33%

25%

18%

10%

-20% 0% 20% 40%

Decrease > -10%

Decrease -5-10%

Decrease -1-4%

No change

Increase 1-4%

Increase 5-10%

Increase >10%

Note: Based on responses from 70 US plan sponsors and money managers using ETFs. Source: 2010 Greenwich Market Pulse – ETFs

Nearly 30% of institutions that do not use ETFs say they lack familiarity with the product. One way to address this lack of information would be for providers to win over investment consultants, who would then be in a position to explain the product to their institutional clients as both a tool for tactical adjustments and a means of obtaining desired exposures. The results of this recent Greenwich Market Pulse suggest that many investment consultants are not currently recommending ETFs or even initiating discussions with their clients about the product.

Source: Greenwich Associates: ETFs Gain Foothold in Institutional Market, April 2010.



Index Provider

ETF Research:

Banks,Brokers,Managers

Fund Supermarkets

Consultants

Regulations

Exchange

Manager/Provider

MarketMakerLiquidity

Provider

Fund Ratings

ETF Portals,Websites,Centres

Tax

INVESTOR

ETFs

ETNsETPs

ETCsETVs

We expect ETF assets to grow in 2010

The landscape will continue to evolve in 2010 and beyond as we see more products from traditional active asset managers and alternative asset class exposures becoming available to ‘mainstream’ retail and institutional investors through standardised and regulated fund structures such as UCITS in Europe. Hedge funds have historically been difficult for many investors to access with the high minimum subscription levels and maximum investor limits, but hedge funds are now noticing the growth and appeal of ETFs which are easy to access, but have powerful distribution networks. So we expect to see more hedge funds looking to create ETFs, with their own funds as the underlying exposure, in an effort to broaden their distribution capabilities.

This will, on one hand, give more investors access to the asset class and the ability to do so in small sizes, with daily liquidity, but also make it challenging for them to understand what they are investing in compared to the historical daily transparency of the underlying portfolio in low-cost index based exposures which ETFs have become known for. It will be important in the coming years to ensure that as new generations of ETFs come to market, investors are educated on their structures and mechanics when they deviate from the traditional definition of ETFs as exchange listed, open-ended, liquid with secondary and primary in-kind creation and redemption (with support from market-makers and other liquidity providers), with real time indicative Net Asset Value (NAV), and transparent where the underlying portfolio is disclosed on a daily basis.

One of the reasons larger institutions are embracing ETFs is due to the fact that many have indicated in various surveys that one of their focuses for product development is multi-asset class investing, and given this focus, many firms are embracing the fact that the ability to deliver alpha across all segments of all asset classes (equities, fixed income, commodities) is not achieved by most firms. Based on net new asset data, we can see that ETFs are being used to implement exposure to various asset classes, with equities being the most popular in Europe in 2009 showing US$33.4 Bn net inflows. In 2009 we saw that investors were moving up the risk spectrum, to emerging market equities, corporate bonds and also commodities.

It has become hard for participants in the financial markets to ignore a product category which broke through the US$1 trillion assets under management milestone for the first time at the end of December 2009. Today there is a growing fan club who cite ETFs as one of the greatest financial innovations in the past two decades.

Challenges

ETFs have been embraced because we are in a ‘back to basic’ environment where they provide transparency on the portfolio’s holdings, offer daily creation/redemption, have multiple market makers, have real-time indicative NAVs etc. We risk moving away from this product and description that has been increasingly embraced by retail and institutional investors and find ourselves at an important crossroads.

This new and growing awareness of ETFs is causing more people in various types of firms and regulators to look at ETFs. Many firms are hoping to find a way to make money from the growing ETF industry such as fund ratings firms, consultants, websites, fund platforms, fund research firms to name a few. These new participants and potential tax and regulatory changes are the new forces impacting the traditional ETF ecosystem in 2010.

Investors need to be aware of the various biases that are inherent in many of these new services. Many are focused on the US listed ETFs, others require the ETF manager/provider to pay to have their ETFs represented/rated, some will require the ETF to be over a specific size and/or be at least a certain age. These biases miss factoring in basic requirements for investors such as ETF structure, domicile, registration and tax reporting to name a few important criteria.

The impact of regulatory and tax changes such as the European Union Directive on markets in Financial Instruments (MiFID II), Undertakings for Collective Transferable Securities (UCITS IV), the Retail Distribution Review (RDR), the Alterantive Investment Fund Manager Directive (AIFMD), Qualified Interest Income (QII), Packaged Retail Investment Products (PRIPs), the Foreign Account Tax Compliance Act (FATCA), the Key Information Document (KID) etc is an area of considerable uncertainty at this time. Many regulators around the world are looking at rules regarding short selling, the use of derivatives, the use of commodity futures, and transparency of fees to name a few. Many of these documents are in the consultation phase and/or the specific guidelines for implementation have not yet been defined.

We are at an important crossroads in the ETF industry. We are seeing funds which do not provide 1) transparency on their underlying portfolios, 2) do not offer in-kind creation/redemption and 3) do not have real time indicative NAVs calling themselves ETFs. Products which are not even funds are being called ETFs. Now that the industry accounts for over US$1 trillion in AUM, product developers are working hard to find ways to put structured products, hedge funds and active funds into ETFs. Agreeing definitions for ETFs, ETNs, ETCs, ETVs, ETPs etc is one of the growing needs in the industry.

Figure 4: 2010 ETF ecosystem Source: Global ETF Research and Implementation Strategy Team, BlackRock.



In the UK, as is the trend globally, all types of institutional and retail investors including advisers are increasingly embracing ETFs as a tool which should be considered and used when implementing asset allocation. An added impetus causing advisers in the UK to embrace ETFs is the Financial Service Authority’s (FSA’s) Retail Distribution Review (RDR) regulatory proposals outlined on 25 November 2008.

The proposals outline the changes the FSA plans to make for the retail investment market to establish a new level of consumer trust and confidence by distinguishing between independent advice and sales advice to create better clarity for consumers. Financial firms will need to implement changes prior to the 31 December 2012 deadline for industry compliance.

ETFs have been cited by the FSA as one of the packaged products that advisers, which consider themselves as independent, should become educated on which will enable them to consider ETFs in their reviews prior to recommending products to their clients. ETFs are noted as an investment tool which can be suitable for retail investment products as they can be a cost efficient and transparent way to access the market.

The structure of ETFs does not support commission remuneration, which is one of the reasons for slow adoption to date among advisers in the UK. In the US, fee-based advisers (paid by the consumer) have embraced the use of ETFs to a greater degree than commission-based advisers (paid by the product provider). In the UK the use of ETFs among advisers is very limited as they are typically multi-tied and tied (meaning that they can only advise on products from one or a limited range of product providers). ETFs are not currently included in the tied or multi-tied product sets.

ETFs are RDR ready and fit into the new adviser charging model proposed by the FSA. As such, we have seen an increasing number of requests for information on ETFs which are both listed and registered for sale in the UK as well as having UK tax status which can make them more efficient for UK domiciled investors1. The good news is that the London Stock Exchange (LSE) was one of the first exchanges to list ETFs in Europe over 10 years ago.

ETFs can be eligible investments for Individual Savings Accounts (ISAs), Self Invested Personal Pensions (SIPPs), Child Trust Funds (CTFs) and offshore bonds.

The use of ETFs within assembled products such as Fund of Funds/Fund of ETFs is growing as product providers see value in using ETFs as low cost beta building blocks to deliver asset allocation. A popular approach has been to create a series of fund of funds with ranging risk/return objectives, i.e. conservative, balanced, growth and dynamic portfolios by strategically allocating among asset classes allowing their clients to switch between products as their broad market views and attitudes to risk change. Creating portfolios built around an asset allocation framework, without specific active investment decisions (security selection and/or market timing) has been a topic of some debate for many years. Most notably, the study published in 1986 entitled “Determinants of Portfolio Performance” by Brinson, Hood and Beebower concluded that asset allocation is the primary determinant of a portfolio’s return variability, with security selection and market-timing playing minor roles.

The majority of ETFs registered for sale in the UK are regulated collective investment schemes and as such fall under the definition of packaged investment products. We have a very large and diverse tool box available with 239 different ETFs on the LSE providing exposure to equity, fixed income and commodity indices at the end of Q1 2010. Of this, 183 had UK distributor status. In total there were 363 ETF listings on the LSE as the multi-currency platform on the LSE allows a single ETF to be listed in multiple currencies.

1 BlackRock does not and cannot provide tax advice. Tax treatment of ETFs including rates

and reliefs may change and will depend upon an investor’s own tax circumstances. BlackRock recommends that all clients seek specialist tax advice from their own tax advisers.

UK Retail Distribution Review (RDR) The use of ETFs is likely to increase significantly by Independent Financial Advisers (IFAs) in the UK based on the regulatory proposals outlined on 25 November 2008 in the Retail Distribution Review (RDR) feedback statement by the UK’s Financial Services Authority (FSA). The proposals outline the changes the FSA plans to make for the retail investment market to establish a new level of consumer trust and confidence by distinguishing between independent advice and sales advice to create better clarity for consumers. There are three main measures 1) improve the clarity for consumers of the characteristics of different service types and the distinctions between them, 2) raise professional standards and 3) reduce the conflicts of interest inherent in remuneration practices and improve transparency of the cost for all advisory services. Clarity of services

Providing greater clarity to consumers by distinguishing between independent advice and sales advice.

Independent advice will be truly independent. With advisers providing recommendations that consider all the products and providers that could meet a customer’s needs. All independent advisers, not just those advising on packaged products, will need to provide unbiased, unrestricted advice that targets the best outcome for each customer, based on a comprehensive and fair analysis of relevant markets.

Sales advice will be where firms recommend the products of one or a limited range of providers, and make this clear to customers.

Remuneration

The FSA will modernise the way that advice is paid for by requiring advisers to agree the cost of financial advice with customers up-front, removing the possibility of commission bias and ensuring the cost of all advice is clear to consumers whenever it is given.

For consumers to understand clearly the different services provided and to recognise the value of advice, the FSA will require separate disclosure of the costs of advisory services from product costs for both independent and non-independent advisory firms.

These changes will be significant as today many IFAs are ‘multi-tied’ and ‘tied’, which respectively describe those selling products from a limited range of providers, and those selling only the products of one provider, such as in a bank. Although there is a further six-month consultation period, to iron out some practical application issues, there is an expectation that financial firms will start to implement changes soon. The deadline for industry compliance is 31 December 2012. In the US, fee-based advisers (paid by the consumer) have embraced the use of ETFs to a greater degree than commission-based advisers (paid by the product provider). In the UK the use of ETFs among IFAs is very limited as they are typically multi-tied and tied. ETFs are not currently included in the tied or multi-tied product sets. Investors who are expressing concerns over counterparty risk, transparency and liquidity when using structured products, swaps, certificates, and notes are showing a preference for ETFs where the structure is a fund, and often, more specifically for ETFs which invest exclusively in physical securities. ETFs may afford investors two forms of liquidity. The first is through trading the shares on a secondary basis on the exchange. The second is on a primary basis via the unique ‘creation’ process, whereby an AP purchases the underlying basket of securities in the local market and deposits the basket ‘in kind’ into the ETF, creating more shares in that ETF. The unique daily creation/redemption process means that the liquidity in the ETF is driven by the liquidity in the underlying securities.



ETFs tend to trade at, or close to, their underlying NAVs. This is because there are arbitrageurs waiting to take advantage of a significant premium or discount relative to the underlying index. An arbitrageur will buy/sell the ETF and place an offsetting buy/sell transaction in the underlying basket of component securities. Divergence in the performance of an ETF, relative to the index it tracks, is possible. Differences tend to be caused by fund fees and expenses, tracking error or other market forces, rebalancing due to corporate actions and index changes and the dividend reinvestment policy of the fund. The motivations for using ETFs have expanded, including the ever-relevant cost advantage and broad market access, as well as themes that have emerged over the past year. Examples of strategies being implemented include managing asset allocation, taking tactical positions and increasing diversification. Investors are also using ETFs to take negative positions in asset classes, either to remove existing unwanted exposure or to express a negative view. This expansion has been fuelled by the increase in the range of asset classes accessible through ETFs. Moreover, the introduction of ETFs covering emerging markets, commodities and property has allowed investors to access some of the best performing asset classes of the past few years. On top of greater asset breadth, the range of instruments has also grown. This expansion in usage, breadth and product flexibility has driven a steady growth in the use of ETFs over the past decade. The growth in beta investments in recent years has been driven by a number of factors. While market conditions have had a noteworthy influence, some other key factors are driving a more permanent shift towards beta, including:

Access: beta products are providing access to an expanding range of market and asset classes, and through a much wider range of instruments.

Diversification: increasingly investors are widening the scope of their investments and looking for exposure to new asset classes and markets.

The changing role of beta: as investors are altering the way they view their investment objectives, alpha and beta decisions are being combined in different ways.

The range of beta tools available to investors has also grown with traditional index funds, index futures, OTC derivatives and ETFs. ETFs share many characteristics with traditional index funds. Importantly, they also offer intra-day liquidity and enhanced flexibility, allowing investors to take both long and short positions. Source: Retail Distribution Review, Financial Services Authority.

UK Retail Distribution Review (RDR) Update On 26 March, FSA published its feedback statement (Policy Statement 10/6) to its Consultation Paper of June 2009 (CP09/18) relating to proposals to improve the clarity with which adviser firms describe their services to consumers, and introduce a system of ‘adviser-charging’ to remove the potential commission-bias through the influence of product providers. The Policy Statement contains final rules in relation to ‘adviser-charging’ and ‘service-labelling’ and FSA will proceed with the proposals set out in the consultation. Therefore, with effect from 1 January 2013, advisers will be prevented from receiving commissions paid by product providers. FSA notes that it wants adviser firms to have charging structures that are product neutral in that the charges reflect the services provided to the client, not the particular product provider or type of product. Product providers are no longer required to monitor ‘appropriate adviser-charging’ (with reference to so-called ‘decency limits’) though there remains a requirement to obtain and validate instructions from the client if the charge is deducted (by the provider) from the client’s investment. This creates a significant challenge for providers as due to a result of

increasing disintermediation, in part due to the growth of platforms, the end-consumer will not be a direct client of the firm. FSA accepts that bespoke share classes to provide for a full range of possible adviser charges (when taken from funds) is impractical and recognises the value of cash accounts provided by platforms or other third-parties to collect adviser charges. This is a particularly important development for factory-gate priced products such as most ETFs, however, it is uncertain whether the current practice of rebating a proportion of the annual management charge, if this is used to fund the consumer cash account, will be acceptable and FSA states that it intends to consult further on whether any rebates should be prohibited. In addition, FSA will proceed with proposals for advisers to describe the advice provided as either independent or ‘restricted’. As noted in previous editions, firms offering independent advice will need to demonstrate that their recommendations are based on a comprehensive and unbiased analysis of the market and that any products selected are made in the interests of clients. If a firm elects to limit its product range to certain investments or strategies, it will need to describe the services it offers as ‘restricted’ and this fact must be clearly disclosed to the consumer. FSA notes that it may be possible for certain advisers servicing specialist client groups to retain the independence ‘label’ even where certain products are excluded from the scope of their advice, although the firm would have to demonstrate that the product or strategy was not appropriate for their clients. FSA observes that this exception is unlikely to be of benefit to most firms since most retail investment products are likely to be appropriate for the vast majority of retail investors. Separately, FSA notes it was clear from responses received that it was not widely understood that ETFs already fall within the current definition of packaged products and for the avoidance of doubt, it is made clear that any products which might achieve similar outcomes as more traditional retail investment products are potentially caught by the new rules. In addition to the feedback statement, FSA has also published the long-awaited Discussion Paper on the role of platforms in facilitating the delivery of the RDR objectives. In particular, the paper discusses how platforms should be remunerated in a post-RDR world and FSA has made clear that its ultimate objective is to separate or ‘unbundle’ product and platform charges to provide greater transparency to consumers. FSA expresses a clear preference for the ‘wrap’ model where either the consumer pays a wrap fee or product charges are rebated, although clearly the latter scenario will be subject to further consideration. FSA goes on to say that it would be prepared to prevent all payments to platforms by product providers as it observes that payments are often to secure ‘shelf-space’, have little relationship to the utility service provided by the platform and typically are used for purposes which do not directly benefit the consumer, a view which draws strong parallels with the position under the MiFID Inducements regime. This is not FSA’s final view on this topic but it does clearly call into question the economics of how platforms will be paid post-RDR. There is no requirement for platforms to extend their service model to be able to trade listed instruments such as ETFs, but with the increasing adoption of ETFs by advisers, many platforms are already reviewing and building the functionality to provide wider securities access. Also, in response to calls from the industry, the FSA intends to make compulsory the transferability of investments from one platform to another. The FSA intends to formally consult on proposals to regulate platforms in the summer and expects to publish final rules by the end of this year, which does not give platforms a significant amount of time to implement the necessary changes to their business models, which will inevitably require significant input from product providers and the adviser community. Comments on the Discussion Paper are invited up to and including 26 May and BlackRock, like many of our competitors, continue to work with the Investment Management Association and other industry practitioners to ensure that our views are fully represented in ongoing discussions with the FSA. Source: Policy Statement 10/6, Distribution of retail investments: Delivering the RDR – feedback to CP09/18 and final rules, Financial Services Authority, BlackRock.



FINRA Regulatory Notice 09-31

FINRA, the Financial Industry Regulatory Authority which regulates all securities firms doing business in the US, issued a regulatory notice in June 2009 to provide guidance on leveraged and inverse ETFs. The notice states that “...inverse and leveraged ETFs that are reset daily typically are unsuitable for retail investors who plan to hold them for longer than one trading session, particularly in volatile markets...”. The following is taken from the Notice: Exchange-traded funds (ETFs) that offer leverage or that are designed to perform inversely to the index or benchmark they track – or both – are growing in number and popularity. While such products may be useful in some sophisticated trading strategies, they are highly complex financial instruments that are typically designed to achieve their stated objectives on a daily basis. Due to the effects of compounding, their performance over longer periods of time can differ significantly from their stated daily objective. Therefore, inverse and leveraged ETFs that are reset daily, typically, are unsuitable for retail investors who plan to hold them for longer than one trading session, particularly in volatile markets. This Notice reminds firms of their sales practice obligations in connection with leveraged and inverse ETFs. In particular, recommendations to customers must be suitable and based on a full understanding of the terms and features of the product recommended; sales materials related to leveraged and inverse ETFs must be fair and accurate; and firms must have adequate supervisory procedures in place to ensure that these obligations are met. Most leveraged and inverse ETFs ‘reset’ daily, meaning that they are designed to achieve their stated objectives on a daily basis. Due to the effect of compounding, their performance over longer periods of time can differ significantly from the performance (or inverse of the performance) of their underlying index or benchmark during the same period of time. For example, between 1 December 2008 and 30 April 2009:

The Dow Jones U.S. Oil & Gas Index gained 2%, while an ETF seeking to deliver twice the index's daily return fell 6% and the related ETF seeking to deliver twice the inverse of the index's daily return fell 26%.

An ETF seeking to deliver three times the daily return of the Russell 1000 Financial Services Index fell 53% while the index actually gained around 8%. The related ETF seeking to deliver three times the inverse of the index's daily return declined by 90% over the same period.

This effect can be magnified in volatile markets. Using a two-day example, if the index goes from 100 to close at 101 on the first day and back down to close at 100 on the next day, the two-day return of an inverse ETF will be different than if the index had moved up to close at 110 the first day but then back down to close at 100 on the next day. In the first case with low volatility, the inverse ETF loses 0.02%; but in the more volatile scenario the inverse ETF loses 1.82%. The effects of mathematical compounding can grow significantly over time, leading to scenarios such as those noted above. Source: Regulatory Notice 09-31, Financial Industry Regulatory Authority.

SEC-FINRA Investor Alert on Leveraged and Inverse ETFs The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) issued an investor alert on Tuesday 18 August 2009 entitled ‘Leveraged and Inverse ETFs: Specialized Products with Extra Risks for Buy-and-Hold Investors’: “The SEC staff and FINRA are issuing this Alert because we believe individual investors may be confused about the performance objectives of leveraged and inverse exchange-traded funds (ETFs). Leveraged and inverse ETFs typically are designed to achieve their stated performance objectives on a daily basis. Some investors might invest in these ETFs with the expectation that the ETFs may meet their stated daily performance objectives over the long term as well. Investors should be aware that performance of these ETFs over a period longer than one day can differ significantly from their stated daily performance objectives.” Source: Leveraged and Inverse ETFs: Specialized Products with Extra Risks for Buy-and-Hold Investors, Financial Industry Regulatory Authority.

CFTC Hearings on Energy Position Limits and Hedge Exemptions U.S. Commodity Futures Trading Commission (CFTC) held hearings on Energy Position Limits and Hedge Exemptions on 28 July, 29 July and 5 August, on whether federal position limits should be set on the energy markets. The hearings provided critical input from a wide range of industry participants and academics to the Commission’s efforts to examine different approaches to regulate energy markets. The Commodity Exchange Act states that the Commission shall impose limits on trading and positions as necessary to eliminate, diminish or prevent the undue burdens on interstate commerce that may result from excessive speculation. The CFTC’s hearings examined the role of position limits in energy markets in fulfilling the CFTC’s mission to ensure the fair, open and efficient functioning of futures markets. Goldman Sachs, JPMorgan Chase and other leading banks are exempt from most commodity-trading limits in order to manage risks as they serve as market makers. The Commodity Futures Trading Commission is looking into whether those exemptions should stand, as it considers blanket limits on a variety of commodity markets. A number of ETPs/ETFs providing exposure to commodities have recently issued notices that they have suspended their creation process. Source: Hearings on Energy Position Limits and Hedge Exemptions, U.S. Commodity Futures Trading Commission.

SEC Evaluating the use of Derivatives by Funds The following is taken from the SEC’s press release announced on 25 March 2010: The SEC staff is conducting a review to evaluate the use of derivatives by mutual funds, ETFs and other investment companies. The review will examine whether and what additional protections are necessary for those funds under the Investment Company Act of 1940. Pending the review’s completion, the SEC has determined to defer consideration of exemptive requests under the Investment Company Act to permit ETFs that would make significant investments in derivatives. The staff’s decision will affect new and pending exemptive requests from certain actively-managed and leveraged ETFs that particularly rely on swaps and other derivative instruments to achieve their investment objectives. The deferral does not affect any existing ETFs or other types of fund applications. “It’s appropriate to engage in a more thorough review of the use of derivatives by ETFs and mutual funds given the questions surrounding the risks associated with the derivative instruments underlying many funds,” said SEC Chairman Mary Schapiro. Source: Press Release: SEC Staff Evaluating the Use of Derivatives by Funds, 2010-45, U.S. Securities and Exchange Commission.



SEC Approves New Stock-by-Stock Circuit Breaker Rules On 10 June 2010, the Securities and Exchange Commission (SEC) approved rules that will require the exchanges and the Financial Industry Regulatory Authority (FINRA) to pause trading in certain individual stocks if the price moves 10% or more in a five-minute period. The proposal from the SEC and FINRA came in response to the market disruption of 6 May 2010, which saw $862 Bn of share value wiped out in 20 minutes1. Under the rules, trading in a stock would pause across U.S. equity markets for a five-minute period in the event that the stock experiences a 10 percent change in price over the preceding five minutes. The pause, which would apply to stocks in the S&P 500® Index, would give the markets the opportunity to attract new trading interest in an affected stock, establish a reasonable market price, and resume trading in a fair and orderly fashion. Initially, these new rules would be in effect on a pilot basis through 10 December 2010. Sources: Press Release: SEC approves New Stock-by-Stock Circuit Breaker Rules, 2010-98, U.S. Securities and Exchange Commission. Bloomberg.

Changes to US tax law may affect non-US resident holders of US ETFs Flow-through benefits

Funds registered under the Investment Company Act of 1940 and structured for tax purposes as Regulated Investment Companies (RICs) under the US Tax Code were previously allowed a package of US tax benefits to non-US shareholders (generally called ‘flow-through’ benefits) as a result of the 2004 American Jobs Creation Act. These flow-through benefits have generally expired as of 31 December 2009. The three affected flow-through benefits are:

Exemption from US withholding tax (30% or lower treaty rate) on fund distributions where such distributions represent Qualified Interest Income (QII). QII is certain fund income derived from interest income on debt of US resident issuers (i.e., obligations issued by Treasury and US corporations). This applied to fixed income ETFs.

Exemption from US withholding tax on any short-term capital gains included in fund distributions. This applied to fixed income and equity ETFs.

Relief from US Estate Tax on fund holdings by non-US resident persons, where the underlying assets would have been exempt from Estate Tax if held directly by the non-US resident person.

The purpose of these three flow-through benefits was to allow a non-US resident RIC shareholder the same treatment on a flow-through basis as if the investments were owned directly by the non-US resident RIC shareholder.

1 Source: Bloomberg

FATCA (foreign account withholding provisions in the HIRE Act) The US Congress recently passed the HIRE Act, which contains provisions still commonly known as FATCA (the legislation previously being the Foreign Account Tax Compliance Act). FATCA is a system designed at getting financial institutions (of all descriptions) around the world to identify US investors – even where they hold indirectly via non-US entities – and report details of these to the IRS. This responds to high levels of political concern in the US over tax evasion, especially by wealthy individuals. In order to encourage compliance with this legislation, the US will from 1 January 2013 impose a 30% US withholding tax on the gross sales proceeds (as well as income) derived by any part of that financial institution from holdings of US financial assets – unless that institution agrees to enter the reporting regime. Funds and fund managers are included in the definition of ‘Foreign Financial Institutions’ (FFIs) and so FATCA goes greatly wider in reach than the existing ‘Qualified Intermediary’ system, with which it will coexist. The impacts on the financial world are undoubtedly complex and potentially far reaching. The basic wording of the HIRE Act leaves many questions of detail unanswered, so financial institutions are waiting keenly for draft regulations to be issued by the US Treasury later this year. It does however currently appear that holdings of US ETFs by non-US investors would be subject to the 30% withholding from gross sales proceeds, where held through a non-US financial intermediary who does not become FATCA compliant when the regime goes live in 2013. Source: BlackRock, April 2010.



Source: Various ETF Providers, Exchanges, Global ETF Research and Implementation Strategy Team, BlackRock.

ETF background ETFs are one of the more innovative new financial products to emerge from the financial industry in the last two decades. Since the launch of the first ETF in the United States in 1993, ETFs have opened a new panorama of investment opportunities. Essentially, ETFs are open-end index funds that are listed and traded on exchanges like stocks. They allow investors to gain broad exposure to stock markets of different countries, emerging markets, sectors and styles as well as fixed income and commodity indices with relative ease on a real-time basis and at a lower cost than many other forms of investing. ETFs are more transparent than traditional funds as the managers provide the ETF portfolio composition to the market on a daily basis. ETFs are bought on a commission basis, just like many other shares. Generally: 1) they can be purchased on margin and are lendable, 2) they can be bought and sold at market, limit or as stop orders, and 3) they do not have any sales loads, although they do have annual expenses that range from 0.00% to 1.56%1. ETFs have some of the lowest expense ratios among registered investment products. The annual expenses are usually deducted from dividend payments, which are typically paid on a semi-annual basis. ETFs possess characteristics that make them an alternative to futures and portfolios of shares for investors who are seeking to gain or reduce country, regional, sector and style as well as fixed income and commodity exposure. ETFs are index funds and not synthetic derivatives. They trade and settle like single shares and are typically backed by baskets of securities designed to track indices. On most exchanges ETFs can be used to go long and short2. ETFs offer diversified exposure and generally have lower expense ratios than traditional active and index funds. ETFs may prove as liquid as the underlying basket of securities as they have a unique daily creation and redemption process. The ability to continually create or redeem shares helps keep an ETF’s market price in line with its underlying Net Asset Value (NAV). A key feature that distinguishes ETFs is that the shares are created by Authorised Participants (APs) or creation/redemption brokers in block-size ‘creation units’.

1 Source: Various ETF Providers, Global ETF Research and Implementation Strategy Team,

BlackRock, as at 26 February 2010. 2 With short sales, the investor risks paying more for a security than the investor received

from the sale.

The creator of ETF shares typically deposits into the applicable fund a portfolio of securities closely approximating the holdings of the index in exchange for an institutional block of ETF shares (usually 50,000). Similarly, they can only be redeemed in redemption units, mainly ‘in-kind’ for a portfolio of securities held by the fund. The redemption and creation processes are very similar. A key benefit of the in-kind distribution of securities is that it does not create a tax event in the United States, which could occur if the fund sold securities and delivered cash. This is a special advantage of ETFs versus an open-end mutual fund, which might have to sell securities to meet cash redemptions. In the United States the term ETFs is increasingly being used to cover a broad set of products with dissimilar characteristics from those described above including products such as closed-end funds, Holding Company Depository Receipts (HOLDRS) and notes. These product structures do not fall within the Securities and Exchange Commission’s (SEC) definition of an ETF, which is posted on the Internet: “Exchange-traded funds, or ETFs, are investment companies that are legally classified as open-end companies or Unit Investment Trusts (UITs), but that differ from traditional open-end companies and UITs in several respects: These differences can be found at: www.sec.gov/answers/etf.htm.” Many institutional investors, intermediaries, family offices and self-directed retail investors have embraced the idea that ETFs are tools that can help them to equitise cash, establish a core holding, use for Tactical Asset Allocation (TAA) and which can be a substitute for a program trade or using futures. They can be used to gain exposure to equity sectors, styles, country, regional, international and emerging market indices, government, corporate bond, money market indices as well as commodity indices at real-time prices during the trading day.



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North America - Equity, 39%Fixed Income - All (ex-Cash), 17.7%Emerging Markets - Equity, 16.8%Asia Pacific - Equity, 6%Europe - Equity, 9.6%Global (ex-US) - Equity, 5.1%Commodities, 2.8%Global - Equity, 2%Fixed Income - Cash (Money Market), 0.6%Alternative, 0.2%Currency, 0.1%Mixed, 0.1%

Figure 5: Global ETF and ETP asset growth, as at end July 2010 ASSETS (US$ Bn) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 JUL-10 ETF Assets Total $0.8 $1.1 $2.3 $5.3 $8.2 $17.6 $39.6 $74.3 $104.8 $141.6 $212.0 $309.8 $412.1 $565.6 $796.7 $711.1 $1,036.0 $1,095.2

ETF Equity Assets $0.8 $1.1 $2.3 $5.3 $8.2 $17.6 $39.6 $74.3 $104.7 $137.5 $205.9 $286.3 $389.6 $526.5 $729.9 $596.4 $841.6 $859.7

ETF Fixed Income Assets $0.1 $0.1 $4.0 $5.8 $23.1 $21.3 $35.8 $59.9 $104.0 $167.0 $200.6

ETF Commodity Assets $0.0 $0.1 $0.3 $0.5 $1.2 $3.4 $6.3 $10.0 $25.6 $30.6

ETP Assets Total $2.0 $5.1 $3.9 $4.1 $6.3 $9.3 $15.9 $32.5 $54.6 $61.2 $119.7 $128.6 ETF/ETP Assets Total $0.8 $1.1 $2.3 $5.3 $8.2 $17.6 $41.6 $79.4 $108.7 $145.7 $218.3 $319.1 $428.0 $598.1 $851.3 $772.3 $1,155.8 $1,223.7 # ETFs 3 3 4 21 21 31 33 92 202 280 282 336 461 714 1,172 1,595 1,945 2,282 # ETPs 2 14 17 17 18 22 64 170 347 517 620 849 # ETF/ETP Total 3 3 4 21 21 31 35 106 219 297 300 358 525 884 1,519 2,112 2,565 3,131

Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 6: Global ETF assets by type of exposure, as at end July 2010 JUL-10 YTD CHANGE # TOTAL AUM # TOTAL AUM % % REGION OF EXPOSURE # ETFs LISTINGS (US$ BN) % TOTAL # ETFs LISTINGS (US$ BN) AUM TOTAL Equity 1,766 3,860 $859.7 78.5% 225 764 $18.1 2.1% -2.8%

North America - Equity 560 942 $427.6 39.0% 65 214 $4.3 1.0% -1.8%

Emerging Markets - Equity 382 791 $184.1 16.8% 83 169 $20.9 12.8% 1.1%

Europe - Equity 462 1,359 $104.7 9.6% 40 254 -$10.0 -8.7% -1.5%

Asia Pacific - Equity 171 363 $65.6 6.0% 23 81 $3.0 4.8% -0.1%

Global (ex-US) - Equity 71 88 $55.4 5.1% 7 16 -$0.2 -0.4% -0.3%

Global - Equity 120 317 $22.2 2.0% 7 30 $0.1 0.4% -0.1%

Fixed Income 349 714 $200.6 18.3% 68 179 $33.6 20.1% 2.2%

Fixed Income - All (ex-Cash) 324 656 $194.1 17.7% 61 164 $35.0 22.0% 2.4%

Fixed Income - Cash (Money Market) 25 58 $6.6 0.6% 7 15 -$1.4 -17.5% -0.2%

Commodities 108 229 $30.6 2.8% 38 87 $5.0 19.7% 0.3%

Alternative 8 14 $1.8 0.2% 6 12 $1.8 100.0% 0.2%

Currency 15 18 $1.6 0.1% 1 4 $0.4 37.5% 0.0%

Mixed 36 37 $0.8 0.1% -1 -1 $0.1 21.7% 0.0% Total 2,282 4,872 $1,095.2 100.0% 337 1,045 $59.1 5.7%


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Figure 7: Global ETF listings, as at end July 2010

AMERICAS EMEA ASIA/PACIFIC Brazil Austria Hungary South Africa Australia Malaysia P Listings: 7 P Listings: 1 P Listings: 1 P Listings: 24 P Listings: 11 P Listings: 4 T Listings: 7 T Listings: 21 T Listings: 1 T Listings: 24 T Listings: 32 T Listings: 5 Providers: 2 Providers: 1 Providers: 1 Providers: 7 Providers: 4 Providers: 3 AUM: US$1.6 Bn AUM: US$0.0 Bn AUM: US$0.0 Bn AUM: US$1.8 Bn AUM: US$2.9 Bn AUM: US$0.4 Bn

Canada Belgium Ireland Spain China New Zealand P Listings: 151 P Listings: 1 P Listings: 14 P Listings: 10 P Listings: 11 P Listings: 6 T Listings: 176 T Listings: 1 T Listings: 14 T Listings: 44 T Listings: 11 T Listings: 6 Providers: 4 Providers: 1 Providers: 2 Providers: 2 Providers: 9 Providers: 2 AUM: US$32.5 Bn AUM: US$0.0 Bn AUM: US$0.3 Bn AUM: US$1.4 Bn AUM: US$9.7 Bn AUM: US$0.4 Bn

Chile Finland Italy Sweden Hong Kong Singapore P Listings: - P Listings: 1 P Listings: 13 P Listings: 16 P Listings: 37 P Listings: 20 T Listings: 50 T Listings: 1 T Listings: 442 T Listings: 46 T Listings: 66 T Listings: 71 Providers: - Providers: 1 Providers: 4 Providers: 2 Providers: 10 Providers: 8 AUM: - AUM: US$0.2 Bn AUM: US$1.8 Bn AUM: US$2.1 Bn AUM: US$23.8 Bn AUM: US$2.6 Bn

Mexico France Netherlands Switzerland India South Korea P Listings: 14 P Listings: 250 P Listings: 11 P Listings: 85 P Listings: 14 P Listings: 57 T Listings: 274 T Listings: 426 T Listings: 106 T Listings: 461 T Listings: 14 T Listings: 57 Providers: 2 Providers: 9 Providers: 4 Providers: 6 Providers: 6 Providers: 11 AUM: US$8.5 Bn AUM: US$53.5 Bn AUM: US$0.3 Bn AUM: US$28.3 Bn AUM: US$0.3 Bn AUM: US$4.3 Bn

United States Germany Norway Turkey Indonesia Taiwan P Listings: 866 P Listings: 371 P Listings: 6 P Listings: 10 P Listings: 1 P Listings: 12 T Listings: 866 T Listings: 1,059 T Listings: 6 T Listings: 10 T Listings: 1 T Listings: 14 Providers: 30 Providers: 9 Providers: 2 Providers: 4 Providers: 1 Providers: 2 AUM: US$741.3 Bn AUM: US$93.2 Bn AUM: US$0.7 Bn AUM: US$0.1 Bn AUM: US$0.0 Bn AUM: US$3.0 Bn

Greece Saudi Arabia UAE Japan Thailand P Listings: 2 P Listings: 2 P Listings: 1 P Listings: 72 P Listings: 3 T Listings: 2 T Listings: 2 T Listings: 1 T Listings: 75 T Listings: 3 Providers: 2 Providers: 1 Providers: 1 Providers: 6 Providers: 2 AUM: US$0.1 Bn AUM: US$0.0 Bn AUM: US$0.0 Bn AUM: US$25.8 Bn AUM: US$0.1 Bn

Slovenia United Kingdom P Listings: 1 P Listings: 176 T Listings: 1 T Listings: 476 Providers: 1 Providers: 9

P Listings = # Primary listings T Listings = # Total listings Providers = # Primary ETF Providers AUM = Assets Under Management in primary listings only AUM: US$0.0 Bn AUM: US$54.2 Bn Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

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MSCI, 24.1%S&P, 22.3%Barclays Capital, 10.1%Russell, 6.2%FTSE, 4.3%STOXX, 4%Markit, 3.8%Dow Jones, 3.7%NASDAQ OMX, 2.5%Deutsche Boerse, 2.2%Topix, 1.2%Hang Seng, 1.2%Nikkei, 1.1%EuroMTS, 1%SIX Swiss Exchange, 0.7%NYSE Euronext, 0.7%CAC, 0.6%WisdomTree, 0.5%Indxis, 0.4%CSI, 0.2%Intellidex, 0.2%BNY Mellon, 0.2%Morningstar, 0.1%S-Network, 0.1%Zacks, 0.1%Value Line, 0%Other, 8.4%

Index providers do not issue products or manage assets, however ETFs are designed to track indices, so investors do consider the underlying index methodology and how representative the index is of the desired exposure. Globally, MSCI ranks first in terms of ETF assets tracking their indices, with US$263.9 Bn in 323 ETFs, reflecting 24.1% market share, while Standard & Poor’s (S&P) ranks second with US$244.3 Bn in 277 ETFs, reflecting 22.3% market share, followed by Barclays Capital with US$110.3 Bn and 10.1% market share in 78 products at the end of July 2010. Figure 8: Global ETF assets by index provider, as at end July 2010 JUL-10 YTD CHANGE # TOTAL AUM # TOTAL AUM % % INDEX PROVIDER # ETFs LISTINGS (US$ BN) % TOTAL # ETFs LISTINGS (US$ BN) AUM TOTAL MSCI 323 1038 $263.9 24.1% 58 284 $20.1 8.2% 0.6%

S&P 277 488 $244.3 22.3% 44 112 -$4.9 -2.0% -1.7%

Barclays Capital 78 189 $110.3 10.1% 8 30 $22.8 26.0% 1.6%

Russell 60 101 $67.9 6.2% -1 1 $1.9 2.9% -0.2%

FTSE 163 359 $47.6 4.3% 37 75 $4.8 11.3% 0.2%

STOXX 214 730 $44.2 4.0% 10 104 -$6.8 -13.3% -0.9%

Markit 92 226 $41.8 3.8% 22 68 $3.6 9.5% 0.1%

Dow Jones 151 278 $40.5 3.7% 15 58 -$0.4 -1.0% -0.3%

NASDAQ OMX 54 86 $26.9 2.5% 11 23 $0.4 1.4% -0.1%

Deutsche Boerse 40 143 $24.2 2.2% 10 52 $0.7 3.0% -0.1%

Topix 53 65 $13.3 1.2% 0 1 $0.9 7.0% 0.0%

Hang Seng 12 32 $13.0 1.2% 3 9 $1.2 10.0% 0.0%

Nikkei 9 15 $12.3 1.1% 1 4 -$0.2 -1.5% -0.1%

EuroMTS 29 91 $11.1 1.0% 7 40 $0.1 1.0% 0.0%

SIX Swiss Exchange 15 28 $7.5 0.7% 2 5 $0.1 1.7% 0.0%

NYSE Euronext 16 34 $7.2 0.7% 6 22 $1.1 17.0% 0.1%

CAC 15 26 $6.5 0.6% -3 0 -$1.0 -13.9% -0.1%

WisdomTree 35 42 $5.9 0.5% -10 -3 $0.1 2.1% 0.0%

Indxis 6 7 $3.9 0.4% -1 -1 $1.1 40.5% 0.1%

CSI 27 28 $2.7 0.2% 16 17 $0.2 9.8% 0.0%

Intellidex 38 41 $2.3 0.2% -4 -11 -$0.3 -10.0% 0.0%

BNY Mellon 11 12 $2.3 0.2% 0 0 $0.0 -2.0% 0.0%

Morningstar 10 10 $1.6 0.1% 0 0 -$0.1 -4.6% 0.0%

S-Network 15 33 $1.1 0.1% 2 2 -$0.1 -4.9% 0.0%

Zacks 14 15 $0.6 0.1% 0 0 $0.0 5.4% 0.0%

Value Line 3 3 $0.2 0.0% -2 -2 -$0.1 -23.8% 0.0%

Other 522 752 $92.2 8.4% 106 155 $13.8 17.5% 0.8% Total 2,282 4,872 $1,095.2 100.0% 337 1,045 $59.1 5.7% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



Figure 9: ETF providers worldwide ranked by AUM, as at end July 2010 JUL-10 YTD CHANGE AUM # AUM % % MARKET PROVIDER # ETFs (US$ BN) % TOTAL PLANNED # ETFs % ETFs (US$ BN) AUM SHARE iShares 453 $506.8 46.3% 16 40 9.7% $17.9 3.7% -0.9% State Street Global Advisors 110 $153.3 14.0% 34 3 2.8% -$7.7 -4.8% -1.5% Vanguard 47 $113.1 10.3% 23 0 0.0% $21.0 22.8% 1.4% Lyxor Asset Management 127 $46.0 4.2% 1 2 1.6% -$0.3 -0.7% -0.3% db x-trackers 161 $39.2 3.6% 5 40 33.1% $1.8 4.9% 0.0% PowerShares 136 $35.6 3.3% 39 11 8.8% $1.0 2.9% -0.1% ProShares 99 $23.7 2.2% 98 21 26.9% $0.5 2.3% -0.1% Van Eck Associates Corp 26 $14.1 1.3% 18 3 13.0% $1.7 13.4% 0.1% Nomura Asset Management 30 $13.8 1.3% 2 0 0.0% $0.4 3.2% 0.0% Credit Suisse Asset Management 41 $11.6 1.1% 11 14 51.9% $1.9 20.1% 0.1% Bank of New York 1 $9.1 0.8% 0 0 0.0% $0.5 6.3% 0.0% Zurich Cantonal Bank 7 $8.7 0.8% 0 3 75.0% $2.0 29.8% 0.1% Commerzbank 79 $6.9 0.6% 2 17 27.4% $0.7 10.8% 0.0% Claymore Securities 69 $6.8 0.6% 35 12 21.1% $0.6 9.7% 0.0% WisdomTree Investments 42 $6.8 0.6% 69 -10 -19.2% $0.3 4.6% 0.0% Amundi Investment Solutions 87 $6.3 0.6% 0 24 38.1% $1.5 31.4% 0.1% Direxion Shares 38 $6.2 0.6% 147 12 46.2% $1.2 22.9% 0.1% Source Markets 50 $6.0 0.5% 18 18 56.3% $3.2 111.5% 0.3% Hang Seng Investment Management 3 $5.9 0.5% 0 0 0.0% $0.6 11.8% 0.0% Nikko Asset Management 14 $5.6 0.5% 0 4 40.0% -$0.1 -2.2% 0.0% ETFlab Investment 35 $5.5 0.5% 0 4 12.9% -$1.6 -22.8% -0.2% EasyETF 64 $5.4 0.5% 2 0 0.0% -$0.5 -7.8% -0.1% Daiwa Asset Management 23 $5.1 0.5% 1 0 0.0% $0.2 3.1% 0.0% UBS Global Asset Management 20 $5.0 0.5% 1 6 42.9% $1.4 41.0% 0.1% China Asset Management 2 $3.6 0.3% 2 0 0.0% -$0.1 -3.3% 0.0% Julius Baer 16 $3.3 0.3% 0 12 300.0% $1.2 56.7% 0.1% Rydex 19 $3.2 0.3% 82 -12 -38.7% $0.2 5.7% 0.0% E Fund Management 2 $3.1 0.3% 1 1 100.0% $1.8 133.9% 0.2% First Trust Advisors 43 $2.8 0.3% 6 3 7.5% $0.7 36.3% 0.1% XACT Fonder 12 $2.6 0.2% 0 0 0.0% -$0.1 -2.2% 0.0% BetaPro Management 58 $2.6 0.2% 2 16 38.1% $0.0 0.4% 0.0% BBVA Asset Management 10 $2.3 0.2% 0 1 11.1% $0.0 -1.3% 0.0% Polaris 8 $2.2 0.2% 3 0 0.0% $0.1 3.2% 0.0% Samsung Investment Trust Management 16 $2.1 0.2% 0 0 0.0% $0.5 31.9% 0.0% Charles Schwab Investment Management 8 $1.4 0.1% 3 2 33.3% $1.1 308.4% 0.1% Mitsubishi UFJ Asset Management 4 $1.3 0.1% 0 0 0.0% $0.8 143.9% 0.1% Banco Itau 1 $1.3 0.1% 0 0 0.0% -$0.2 -13.0% 0.0% Satrix Managers 7 $1.3 0.1% 1 0 0.0% -$0.1 -5.1% 0.0% PIMCO 10 $1.2 0.1% 10 1 11.1% $0.7 152.2% 0.1% Woori Asset Management 10 $0.9 0.1% 8 2 25.0% $0.5 123.1% 0.0% BOCI-Prudential Asset Management 3 $0.9 0.1% 0 0 0.0% -$0.1 -7.1% 0.0% Fubon Asset Management 4 $0.9 0.1% 0 0 0.0% $0.3 49.1% 0.0% RBS 10 $0.9 0.1% 21 0 0.0% $0.1 11.9% 0.0% Hua An Fund Management 1 $0.7 0.1% 1 0 0.0% $0.5 292.5% 0.0% BMO Asset Management 30 $0.7 0.1% 0 17 130.8% $0.5 336.9% 0.0% Bank of Communications 1 $0.6 0.1% 0 0 0.0% $0.6 100.0% 0.1% HSBC 10 $0.6 0.1% 11 6 150.0% $0.2 56.0% 0.0% AIG-Huatai Fund Management 1 $0.5 0.0% 0 0 0.0% -$0.1 -14.3% 0.0% China Southern Fund Management 1 $0.5 0.0% 0 1 100.0% $0.5 100.0% 0.0% ETF Securities 25 $0.5 0.0% 0 4 19.0% $0.2 52.2% 0.0% Mirae Asset MAPS Global Investments 14 $0.5 0.0% 0 3 27.3% $0.1 20.4% 0.0% RevenueShares 6 $0.5 0.0% 8 0 0.0% $0.1 43.5% 0.0% Marshall Wace Asset Management 3 $0.4 0.0% 0 3 100.0% $0.4 100.0% 0.0% Global X Funds 14 $0.4 0.0% 23 7 100.0% $0.3 318.0% 0.0% KB Asset Management 4 $0.3 0.0% 0 1 33.3% $0.1 24.0% 0.0% DBS Asset Management 2 $0.3 0.0% 0 0 0.0% $0.0 5.7% 0.0% Benchmark Asset Management 7 $0.3 0.0% 7 1 16.7% $0.1 23.7% 0.0% Korea Investment Trust Management 5 $0.3 0.0% 0 0 0.0% -$0.1 -20.8% 0.0% DnB NOR Asset Management 3 $0.3 0.0% 0 0 0.0% -$0.1 -20.2% 0.0% Fortune SGAM Fund Management 1 $0.2 0.0% 0 1 100.0% $0.2 100.0% 0.0% Smartshares Limited 5 $0.2 0.0% 0 0 0.0% $0.0 -3.9% 0.0% i-VCAP Management 1 $0.2 0.0% 0 0 0.0% $0.0 10.2% 0.0% Seligson & Co Fund Management 1 $0.2 0.0% 0 0 0.0% -$0.1 -19.5% 0.0% ICBC Credit Suisse Asset Management 1 $0.2 0.0% 0 0 0.0% -$0.2 -53.9% 0.0%

continued…



Figure 9 (continued): ETF providers worldwide ranked by AUM, as at end July 2010

JUL-10 YTD CHANGE AUM # AUM % % MARKET PROVIDER # ETFs (US$ BN) % TOTAL PLANNED # ETFs % ETFs (US$ BN) AUM SHARE IndexIQ Advisors 9 $0.2 0.0% 44 4 80.0% $0.1 78.1% 0.0% AmInvestment Management 2 $0.2 0.0% 0 0 0.0% $0.0 7.5% 0.0% Bosera Asset Management 1 $0.2 0.0% 1 1 100.0% $0.2 100.0% 0.0% XShares Advisors 5 $0.1 0.0% 34 0 0.0% $0.0 -13.0% 0.0% Absa Capital 7 $0.1 0.0% 0 0 0.0% $0.0 0.8% 0.0% Fidelity Management & Research 1 $0.1 0.0% 0 0 0.0% $0.0 5.9% 0.0% AMP 1 $0.1 0.0% 0 0 0.0% -$0.1 -49.0% 0.0% JPM Structured Fund Management 6 $0.1 0.0% 0 0 0.0% -$0.1 -30.4% 0.0% Bips Investment Managers 2 $0.1 0.0% 0 0 0.0% $0.1 139.1% 0.0% Finans Portfoy Yonetimi 6 $0.1 0.0% 0 0 0.0% $0.0 -20.6% 0.0% Emerging Global Advisors 7 $0.1 0.0% 16 3 75.0% $0.1 138.9% 0.0% Old Mutual Global Shares 5 $0.1 0.0% 0 4 400.0% $0.0 47.5% 0.0% Yurie Asset Management 2 $0.1 0.0% 0 0 0.0% $0.0 -10.5% 0.0% Jefferies Asset Management 4 $0.1 0.0% 1 1 33.3% $0.0 -5.5% 0.0% One Asset Management 2 $0.1 0.0% 0 0 0.0% $0.0 -14.8% 0.0% ALPS ETF Trust 2 $0.1 0.0% 7 0 0.0% $0.0 160.1% 0.0% Alpha Asset Management 1 $0.1 0.0% 0 0 0.0% $0.0 -30.7% 0.0% AdvisorShares 3 $0.1 0.0% 5 2 200.0% $0.0 186.3% 0.0% Sensible Asset Management 1 $0.1 0.0% 0 0 0.0% $0.0 31.7% 0.0% UOB Asset Management 1 $0.0 0.0% 0 0 0.0% -$0.2 -78.0% 0.0% CIMB-Principal Asset Management 2 $0.0 0.0% 1 1 100.0% -$0.1 -72.4% 0.0% Fortress Asset Managers 1 $0.0 0.0% 0 0 0.0% $0.0 15.4% 0.0% Prudential Asset Management 2 $0.0 0.0% 0 1 100.0% $0.0 52.0% 0.0% KTB Asset Management 1 $0.0 0.0% 0 0 0.0% $0.0 151.7% 0.0% HQ Fonder 7 $0.0 0.0% 0 4 133.3% $0.0 0.0% 0.0% Ping An 1 $0.0 0.0% 0 1 100.0% $0.0 0.0% 0.0% Investec Fund Management 1 $0.0 0.0% 0 0 0.0% $0.0 -12.8% 0.0% NCB Investment Services 1 $0.0 0.0% 0 0 0.0% $0.0 -23.8% 0.0% Grail Advisors 7 $0.0 0.0% 3 2 40.0% $0.0 62.1% 0.0% Kotak Mahindra Asset Management 3 $0.0 0.0% 0 1 50.0% $0.0 149.4% 0.0% Daishin Investment Trust Management 1 $0.0 0.0% 0 0 0.0% $0.0 7.7% 0.0% Tong Yang Investment Trust Management 1 $0.0 0.0% 0 0 0.0% $0.0 -17.3% 0.0% Da Cheng International Asset Management 1 $0.0 0.0% 0 1 100.0% $0.0 0.0% 0.0% China International Capital Corp 1 $0.0 0.0% 0 1 100.0% $0.0 0.0% 0.0% OTP Fund Management 1 $0.0 0.0% 0 0 0.0% $0.0 -10.7% 0.0% Geary Advisors 2 $0.0 0.0% 0 0 0.0% $0.0 97.6% 0.0% Falcom Financial Services 2 $0.0 0.0% 0 2 100.0% $0.0 0.0% 0.0% Simplex Asset Management 1 $0.0 0.0% 0 0 0.0% $0.0 -0.4% 0.0% FaithShares 5 $0.0 0.0% 0 0 0.0% $0.0 -19.0% 0.0% Russell Investments 1 $0.0 0.0% 28 1 100.0% $0.0 0.0% 0.0% Australian Index Investments 6 $0.0 0.0% 0 6 100.0% $0.0 0.0% 0.0% Osmosis Investment Management 1 $0.0 0.0% 0 1 100.0% $0.0 0.0% 0.0% NBG Asset Management 1 $0.0 0.0% 1 0 0.0% $0.0 0.0% 0.0% TMB Asset Management 1 $0.0 0.0% 0 0 0.0% $0.0 -2.1% 0.0% Is Investment 2 $0.0 0.0% 0 0 0.0% $0.0 -20.3% 0.0% Medvesek Pusnik AM 1 $0.0 0.0% 0 0 0.0% $0.0 -3.7% 0.0% Javelin Investment Management 2 $0.0 0.0% 0 1 100.0% $0.0 -62.1% 0.0% Hyundai Investments 1 $0.0 0.0% 0 1 100.0% $0.0 0.0% 0.0% US One Trust 1 $0.0 0.0% 2 1 100.0% $0.0 0.0% 0.0% Nedbank Capital 1 $0.0 0.0% 0 1 100.0% $0.0 0.0% 0.0% National Bank of Abu Dhabi 1 $0.0 0.0% 2 1 100.0% $0.0 0.0% 0.0% Indo Premier Securities 1 $0.0 0.0% 0 0 0.0% $0.0 -7.3% 0.0% Reliance Capital Asset Management 1 $0.0 0.0% 4 0 0.0% $0.0 -4.2% 0.0% Pax World Management 1 $0.0 0.0% 2 1 100.0% $0.0 0.0% 0.0% Bizim Menkul Degerler 1 $0.0 0.0% 0 0 0.0% $0.0 -9.4% 0.0% Quantum Asset Management 1 $0.0 0.0% 0 0 0.0% $0.0 15.9% 0.0% Ak Securities 1 $0.0 0.0% 0 0 0.0% $0.0 0.5% 0.0% PRUDENTIAL ICICI 1 $0.0 0.0% 0 0 0.0% $0.0 5.2% 0.0% UTI Asset Management 1 $0.0 0.0% 1 0 0.0% $0.0 -90.6% 0.0% Think Capital 5 $0.0 0.0% 0 0 0.0% $0.0 0.0% 0.0% Al Mal Capital - - - 1 - - - - - AllianceBernstein - - - 2 - - - - - Allianz SE - - - 1 - - - - - Capital West Securities - - - 1 - - - - -

continued…



SSgA, 45.0%

iShares, 25.7%

ProShares, 8.7%

Direxion Shares, 5.9%

PowerShares, 5.6%

Others, 9.0%

Figure 9 (continued): ETF providers worldwide ranked by AUM, as at end July 2010

JUL-10 YTD CHANGE AUM # AUM % % MARKET PROVIDER # ETFs (US$ BN) % TOTAL PLANNED # ETFs % ETFs (US$ BN) AUM SHARE CCB Principal Asset Management - - - 1 - - - - - Dreyfus Corp - - - 1 - - - - - Eaton Vance - - - 5 - - - - - Exchange Traded Spreads Trust - - - 5 - - - - - Factor Advisors - - - 22 - - - - - FactorShares - - - 5 - - - - - Firsthand Capital - - - 1 - - - - - Florentez Investment - - - 1 - - - - - FocusShares - - - 6 - - - - - Gaon Investment House - - - 2 - - - - - Garanti Bank - - - 1 - - - - - Georgetown Investment Management - - - 5 - - - - - Government Service Insurance Systems - - - 1 - - - - - Guotai Asset Management - - - 1 - - - - - Hinduja Bank (Switzerland) - - - 1 - - - - - Huntington Asset Advisors - - - 2 - - - - - John Hancock - - - 1 - - - - - JP Morgan Asset Management - - - 2 - - - - - Kuveyt Turk Participation Bank - - - 1 - - - - - Legg Mason - - - 1 - - - - - Macro Securities Depositor - - - 2 - - - - - Motilal Oswal Asset Management - - - 1 - - - - - Next Investments - - - 1 - - - - - Northern Trust - - - 2 - - - - - Penghua Fund Management - - - 3 - - - - - Qbasis Invest - - - 1 - - - - - RiverPark Advisors - - - 2 - - - - - ShariahShares - - - 2 - - - - - Spinnaker ETF Trust - - - 1 - - - - - T Rowe Price - - - 1 - - - - - Tata Mutual Fund - - - 1 - - - - - Other (Planned) - - - 20 - - - - - Total 2,282 $1,095.2 100.0% 970 337 17.3% $59.1 5.7% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 10: Top five global ETF providers by average daily turnover, as at end July 2010 AVERAGE DAILY TURNOVER (US$ MN) % MARKET % MARKET CHANGE % PROVIDER DEC-09 SHARE JUL-10 SHARE (US$ MN) CHANGE SSgA $19,861.8 39.2% $29,894.3 45.0% $10,032.5 50.5%

iShares $14,572.0 28.7% $17,089.0 25.7% $2,517.0 17.3%

ProShares $3,891.8 7.7% $5,784.0 8.7% $1,892.2 48.6%

Direxion Shares $3,446.7 6.8% $3,941.1 5.9% $494.5 14.3%

PowerShares $3,219.9 6.4% $3,699.9 5.6% $480.1 14.9%

Others $5,712.8 11.3% $5,962.0 9.0% $249.2 4.4% Total $50,705.0 100.0% $66,370.4 100.0% $15,665.4 30.9% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



Figure 11: ETF listings by exchange, as at end July 2010 # PRIMARY # TOTAL AUM ADV REGION COUNTRY EXCHANGE ETF LISTINGS ETF LISTINGS (US$ BN) (US$ MN)

Asia Pacific 248 355 $73.2 $886.8 Australia Australian Securities Exchange 11 32 $2.9 $17.3

China Shanghai Stock Exchange 8 8 $5.9 $200.8

Shenzhen Stock Exchange 3 3 $3.8 $114.5

Hong Kong Hong Kong Stock Exchange 37 66 $23.8 $312.3

India Bombay Stock Exchange 2 2 $0.0 $0.0

National Stock Exchange 12 12 $0.3 $3.6

Indonesia Indonesia Stock Exchange 1 1 $0.0 $0.0

Japan Osaka Securities Exchange 6 6 $8.9 $51.9

Tokyo Stock Exchange 66 69 $17.0 $53.3

Malaysia Bursa Malaysia Securities Berhad 4 5 $0.4 $0.1

New Zealand New Zealand Stock Exchange 6 6 $0.4 $0.2

Singapore Singapore Stock Exchange 20 71 $2.6 $17.6

South Korea Korea Stock Exchange 57 57 $4.3 $89.7

Taiwan Taiwan Stock Exchange 12 14 $3.0 $25.1

Thailand Stock Exchange of Thailand 3 3 $0.1 $0.5 Americas 1,038 1,373 $783.8 $62,478.5 Brazil BM&F Bovespa 7 7 $1.6 $14.6

Canada Toronto Stock Exchange 151 176 $32.5 $769.2

Chile Bolsa Comercio Santiago - 50 - $0.1

Mexico Mexican Stock Exchange 14 274 $8.5 $230.9

US BATS - - - $12,255.5

NASDAQ OMX BX - - - $1,728.9

CBOE - - - $210.4

Chicago - - - $681.4

NSX (Cincinnati) - - - $325.1

FINRA-ADF - - - $15,063.6

ISE - - - $141.2

NASDAQ 72 72 $28.2 $16,042.5

NYSE AMEX - - - $6.1

NYSE Arca 794 794 $713.1 $15,008.9 Europe, Middle East and Africa (EMEA) 996 3,144 $238.1 $3,005.1 Austria Wiener Borse 1 21 $0.0 $0.2

Belgium NYSE Euronext Brussels 1 1 $0.0 $0.2

Finland NASDAQ OMX Helsinki 1 1 $0.2 $2.0

France NYSE Euronext Paris 250 426 $53.5 $379.1

Germany Deutsche Boerse 371 706 $93.2 $725.5

Boerse Stuttgart - 353 - $20.1

Greece Athens Exchange 2 2 $0.1 $0.1

Hungary Budapest Stock Exchange 1 1 $0.0 $0.3

Ireland Irish Stock Exchange 14 14 $0.3 $0.1

Italy Borsa Italiana 13 442 $1.8 $318.8

Netherlands NYSE Euronext Amsterdam 11 106 $0.3 $56.6

Norway Oslo Stock Exchange 6 6 $0.7 $46.3

Saudi Arabia Saudi Stock Exchange 2 2 $0.0 $0.1

Slovenia Ljubljana Stock Exchange 1 1 $0.0 $0.0

South Africa Johannesburg Stock Exchange 24 24 $1.8 $5.8

Spain Bolsa de Madrid 10 44 $1.4 $17.0

Sweden NASDAQ OMX Stockholm 16 46 $2.1 $67.0

Switzerland SIX Swiss Exchange 85 461 $28.3 $155.4

Turkey Istanbul Stock Exchange 10 10 $0.1 $30.6

UAE Abu Dhabi 1 1 $0.0 $0.0

United Kingdom London Stock Exchange 176 410 $54.2 $331.4

Turquoise (not an official exchange) - 37 - $0.0

Chi-X (not an official exchange) - 29 - $50.0

European Reported OTC - $798.8 Total 2,282 4,872 $1,095.2 $66,370.4 To avoid double counting, assets shown above refer only to primary listings. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



Figure 12: Global ETP listings, as at end July 2010

AMERICAS EMEA ASIA/PACIFIC Canada France Netherlands Australia Singapore P Listings: 1 P Listings: 3 P Listings: - P Listings: 5 P Listings: - T Listings: 21 T Listings: 46 T Listings: 33 T Listings: 5 T Listings: 2 Providers: 1 Providers: 1 Providers: - Providers: 1 Providers: - Assets: US$0.4 Bn Assets: 0.0 Assets: - Assets: US$0.6 Bn Assets: -

Mexico Germany South Africa Hong Kong South Korea P Listings: - P Listings: 84 P Listings: 2 P Listings: - P Listings: 1 T Listings: 23 T Listings: 339 T Listings: 2 T Listings: 1 T Listings: 1 Providers: - Providers: 6 Providers: 2 Providers: - Providers: 1 Assets: - Assets: US$0.7 Bn Assets: US$1.9 Bn Assets: - Assets: US$0.0 Bn

United States Israel UAE India P Listings: 151 P Listings: 292 P Listings: 1 P Listings: 7 T Listings: 151 T Listings: 292 T Listings: 1 T Listings: 7 Providers: 18 Providers: 7 Providers: 1 Providers: 7 Assets: US$93.6 Bn Assets: US$12.6 Bn Assets: US$0.0 Bn Assets: US$0.4 Bn

Italy United Kingdom Japan P Listings: - P Listings: 293 P Listings: 9 T Listings: 47 T Listings: 354 T Listings: 29 Providers: - Providers: 6 Providers: 4 Assets: - Assets: US$18.0 Bn Assets: US$0.3 Bn

T P

P Listings = # Primary listings T Listings = # Total listings Providers = # Primary ETP Providers Assets = Assets in primary listings only


1

2

4

57

8

9

11

12

13

16

17 9

8

3 10 14 6

7 15 7 11



Figure 13: ETP providers around the world ranked by assets, as at end July 2010

JUL-10 YTD CHANGE ASSETS # ASSETS % % MARKET PROVIDER # ETPs (US$ BN) % TOTAL PLANNED # ETPs % ETPs (US$ BN) ASSETS SHARE State Street Global Advisors 1 $48.2 37.5% 0 0 0.0% $8.4 21.2% 4.3%

ETF Securities 196 $19.4 15.1% 34 42 27.3% $3.2 20.0% 1.6%

Deutsche Bank 59 $10.4 8.1% 4 25 73.5% -$3.2 -23.4% -3.3%

iShares 4 $10.3 8.0% 1 0 0.0% $0.6 6.6% -0.1%

Barclays (iPath) 42 $6.7 5.2% 25 12 40.0% $0.7 12.2% 0.2%

United States Commodity Funds 8 $5.0 3.9% 1 1 14.3% -$2.5 -33.1% -2.4%

Merrill Lynch 17 $4.7 3.6% 0 0 0.0% -$0.6 -10.7% -0.7%

Rydex 9 $2.4 1.9% 13 0 0.0% -$0.3 -9.8% -0.4%

Absa Capital 1 $1.9 1.5% 3 0 0.0% $0.0 1.5% -0.1%

JPMorgan Chase 2 $1.5 1.2% 0 0 0.0% $0.8 115.8% 0.6%

ProShares 12 $1.5 1.2% 38 0 0.0% $0.5 43.9% 0.3%

Swedish Export Credit Corp 7 $0.8 0.6% 0 0 0.0% -$0.1 -8.2% -0.1%

Source Markets 28 $0.8 0.6% 0 0 0.0% $0.4 89.1% 0.3%

Claymore Securities 1 $0.4 0.3% 2 1 100.0% $0.4 100.0% 0.3%

GreenHaven Commodity Services 1 $0.3 0.2% 0 0 0.0% $0.0 14.8% 0.0%

Nomura Asset Management 3 $0.2 0.2% 0 -1 -25.0% $0.0 -9.5% 0.0%

UBS Global Asset Management 69 $0.2 0.1% 0 69 100.0% $0.2 100.0% 0.1%

Benchmark Asset Management 1 $0.2 0.1% 0 0 0.0% $0.1 75.9% 0.1%

RBS 15 $0.1 0.1% 0 15 100.0% $0.1 100.0% 0.1%

Morgan Stanley 4 $0.1 0.1% 0 0 0.0% $0.0 41.6% 0.0%

Lyxor 4 $0.1 0.1% 0 1 33.3% $0.0 0.0% 0.0%

UTI Asset Management 1 $0.1 0.1% 0 0 0.0% $0.0 43.5% 0.0%

Barclays Capital 9 $0.1 0.1% 0 1 12.5% $0.0 40.4% 0.0%

Reliance Capital Asset Management 1 $0.1 0.1% 0 0 0.0% $0.0 35.8% 0.0%

Goldman Sachs 2 $0.1 0.0% 0 0 0.0% $0.0 -7.1% 0.0%

HSBC USA 1 $0.1 0.0% 0 0 0.0% $0.0 -23.0% 0.0%

Credit Suisse 3 $0.1 0.0% 0 2 200.0% $0.1 1819.2% 0.0%

Simplex Asset Management 1 $0.1 0.0% 0 0 0.0% $0.0 67.6% 0.0%

Mitsubishi UFJ Asset Management 4 $0.1 0.0% 0 4 100.0% $0.1 100.0% 0.0%

Standard Commodities 1 $0.0 0.0% 0 1 100.0% $0.0 100.0% 0.0%

Kotak Mahindra Asset Management 1 $0.0 0.0% 0 0 0.0% $0.0 34.7% 0.0%

SBI Funds Management 1 $0.0 0.0% 0 0 0.0% $0.0 20.5% 0.0%

Teucrium Trading 1 $0.0 0.0% 0 1 100.0% $0.0 100.0% 0.0%

Religare India Asset Management 1 $0.0 0.0% 0 1 100.0% $0.0 100.0% 0.0%

Hyundai Investments 1 $0.0 0.0% 0 0 0.0% $0.0 -41.0% 0.0%

Dubai Commodities Asset Management 1 $0.0 0.0% 0 0 0.0% $0.0 6.8% 0.0%

Quantum Asset Management 1 $0.0 0.0% 0 0 0.0% $0.0 44.1% 0.0%

Mizuho Asset Management 1 $0.0 0.0% 0 1 100.0% $0.0 100.0% 0.0%

Clade Investment Management 1 $0.0 0.0% 0 0 0.0% $0.0 0.0% 0.0%

Societe Generale 41 $0.0 0.0% 0 41 100.0% $0.0 0.0% 0.0%

KSM 98 N/A* N/A 0 -1 -1.0% N/A N/A N/A

Mabat 50 N/A* N/A 0 0 0.0% N/A N/A N/A

Tachlit 51 N/A* N/A 0 1 2.0% N/A N/A N/A

Psagot 48 N/A* N/A 0 13 37.1% N/A N/A N/A

Hadas 14 N/A* N/A 0 0 0.0% N/A N/A N/A

Index 20 N/A* N/A 0 0 0.0% N/A N/A N/A

Harel 11 N/A* N/A 0 -1 -8.3% N/A N/A N/A

Axis Mutual Fund - - - 1 - - - - -

Birla Sun Life Mutual Fund - - - 1 - - - - -

Cydinar Sdn Bhd - - - 1 - - - - -

GAM Holding - - - 4 - - - - -

HDFC Mutual Fund - - - 1 - - - - -

ING OptiMix - - - 1 - - - - -

Jefferies Asset Management - - - 2 - - - - -

Other (Planned ETP) - - - 3 - - - - -

Prudential ICICI - - - 1 - - - - -

RiddiSiddhi Bullions - - - 1 - - - - -

RRUSAL - - - 1 - - - - -

Sprott Asset Management - - - 1 - - - - -

Tata Mutual Fund - - - 1 - - - - -

WealthNotes Capital Management - - - 1 - - - - - Total 849 $128.6 100.0% 141 229 36.9% $8.9 7.4% *Individual Assets of Israeli providers are temporarily unavailable. An aggregate value for Israeli ETPs has been included in the total Assets. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, Bank of Israel.



Figure 14: ETP listings by exchange, as at end July 2010 # PRIMARY # TOTAL ASSETS ADV REGION COUNTRY EXCHANGE ETP LISTINGS ETP LISTINGS (US$ BN) (US$ MN)

Asia Pacific 22 45 $1.3 $18.5 Australia Australian Securities Exchange 5 5 $0.6 $2.4

Hong Kong Hong Kong Stock Exchange - 1 - $1.9

India National Stock Exchange 7 7 $0.4 $3.9

Japan Osaka Securities Exchange 4 4 $0.3 $1.7

Tokyo Stock Exchange 5 25 $0.1 $5.7

Singapore Singapore Stock Exchange - 2 - $2.9

South Korea Korea Stock Exchange 1 1 $0.0 $0.0 Americas 152 195 $94.1 $4,706.1 Canada Toronto Stock Exchange 1 21 $0.4 $6.1

Mexico Mexican Stock Exchange - 23 - $0.3

US BATS - - - $826.9

Boston - - - $151.3

CBOE - - - $19.8

Chicago - - - $86.0

Cincinnati - - - $29.3

FINRA-ADF - - - $1,270.5

ISE - - - $21.3

NASDAQ - - - $1,000.5

NYSE Arca 151 151 $93.6 $1,294.1 Europe, Middle East and Africa (EMEA) 675 1,175 $33.2 $299.4 Botswana Botswana Stock Exchange - 1 - $0.0

France NYSE Euronext Paris 3 46 $0.0 $7.9

Germany Deutsche Boerse 84 206 $0.7 $25.6

Boerse Stuttgart - 193 - $2.7

Israel Tel Aviv Stock Exchange 292 292 $12.6 $86.2

Italy Borsa Italiana - 47 - $24.6

Netherlands NYSE Euronext Amsterdam - 33 - $2.3

South Africa Johannesburg Stock Exchange 2 2 $1.9 $4.1

UAE NASDAQ Dubai 1 1 $0.0 $0.0

United Kingdom London Stock Exchange 293 339 $18.0 $144.8

Turquoise (not an official exchange) - 4 - $0.0

Chi-X (not an official exchange) - 11 - $1.3 Total 849 1,415 $128.6 $5,024.0 To avoid double counting, assets shown above refer only to primary listings. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, Bank of Israel.



Figure 15: ETF and ETP listings, as at end July 2010 ASSETS UNDER # # # PRIMARY NEW IN NEW IN TOTAL MANAGEMENT (US$ BN) CHANGE IN AUM # EXCHANGES PLANNED LOCATION LISTINGS 2009 2010 YTD LISTINGS 2009 2010 YTD US$ BN % PROVIDERS (OFFICIAL) NEW Exchange Traded Funds (ETFs) US 866 121 117 866 $705.5 $741.3 $35.8 5.1% 30 2 808

Europe 969 215 150 3,117 $226.9 $236.3 $9.4 4.2% 35 18 80*

Austria 1 - - 21 $0.1 $0.0 $0.0 -37.3% 1 1

Belgium 1 - - 1 $0.1 $0.0 $0.0 -30.8% 1 1

Finland 1 - - 1 $0.3 $0.2 -$0.1 -19.5% 1 1

France 250 55 34 426 $53.5 $53.5 $0.0 0.0% 9 1

Germany 371 80 40 1,059 $96.2 $93.2 -$3.0 -3.1% 9 2

Greece 2 1 - 2 $0.1 $0.1 $0.0 -23.9% 2 1

Hungary 1 - - 1 $0.0 $0.0 $0.0 -10.7% 1 1

Ireland 14 - - 14 $0.2 $0.3 $0.1 27.1% 2 1

Italy 13 - 2 442 $1.9 $1.8 -$0.1 -3.7% 4 1

Netherlands 11 7 1 106 $0.2 $0.3 $0.0 7.3% 4 1

Norway 6 - - 6 $0.8 $0.7 -$0.1 -8.5% 2 1

Slovenia 1 - - 1 $0.0 $0.0 $0.0 -3.7% 1 1

Spain 10 1 - 44 $2.4 $1.4 -$1.0 -42.5% 2 1

Sweden 16 7 4 46 $2.1 $2.1 $0.0 -0.9% 2 1

Switzerland 85 20 35 461 $21.7 $28.3 $6.6 30.4% 6 1

Turkey 10 2 - 10 $0.2 $0.1 $0.0 -20.4% 4 1

United Kingdom 176 42 34 476 $47.1 $54.2 $7.1 15.1% 9 1

Canada 151 32 40 176 $28.5 $32.5 $4.0 13.9% 4 1 10

Japan 72 7 4 75 $24.6 $25.8 $1.2 4.9% 6 2 2

Hong Kong 37 11 14 66 $20.7 $23.8 $3.1 15.0% 10 1 1

China 11 1 4 11 $6.3 $9.7 $3.4 54.5% 9 2 13

Mexico 14 7 1 274 $8.1 $8.5 $0.3 4.0% 2 1 1

South Korea 57 17 10 57 $3.2 $4.3 $1.1 34.9% 11 1 8

Taiwan 12 1 - 14 $2.7 $3.0 $0.4 13.0% 2 1 5

Australia 11 1 7 32 $2.4 $2.9 $0.5 21.1% 4 1 2

Singapore 20 2 11 71 $2.6 $2.6 $0.0 0.5% 8 1 1

South Africa 24 6 1 24 $1.8 $1.8 $0.0 1.6% 7 1 12

Brazil 7 - 3 7 $1.7 $1.6 -$0.1 -6.8% 2 1 0

Malaysia 4 - 1 5 $0.3 $0.4 $0.0 11.1% 3 1 2

New Zealand 6 - - 6 $0.5 $0.4 -$0.1 -27.9% 2 1 0

India 14 1 2 14 $0.2 $0.3 $0.1 27.6% 6 2 14

Thailand 3 1 - 3 $0.1 $0.1 $0.0 -13.9% 2 1 0

Saudi Arabia 2 - 1 2 - $0.0 $0.0 100.0% 1 1 0

UAE 1 - 2 1 - $0.0 $0.0 100.0% 1 1 3

Indonesia 1 - - 1 $0.0 $0.0 $0.0 -7.3% 1 1 0

Chile - - - 50 - - - - - 1 0

Egypt - - - - - - - - - - 1

Israel - - - - - - - - - - 5

Philippines - - - - - - - - - - 1

Sri Lanka - - - - - - - - - - 1 ETF Total 2,282 423 368 4,872 $1,036.0 $1,095.2 $59.1 5.7% 124 42 970 *Includes 21 undisclosed RBS ETFs, 10 undisclosed HSBC ETFs. To avoid double counting, assets shown above refer only to primary listings. New in 2009, 2010 and # Providers also refers only to primary listings. continued…



Figure 15 (continued): ETF and ETP listings, as at end July 2010 # # # PRIMARY NEW IN NEW IN TOTAL ASSETS (US$ BN) CHANGE IN ASSETS # EXCHANGES PLANNED LOCATION LISTINGS 2009 2010 YTD LISTINGS 2009 2010 YTD US$ BN % PROVIDERS (OFFICIAL) NEW Exchange Traded Products (ETPs) US ETPs (HOLDRS) 17 - - 17 $5.2 $4.7 -$0.6 -10.7% 1 1 0

US ETPs (Alternative) 3 2 1 3 $0.0 $2.0 $2.0 100.0% 2 1 0

US ETPs (Equity) 19 5 2 19 $2.0 $2.6 $0.7 34.2% 7 1 1

US ETPs (Currency) 27 - - 27 $7.0 $4.5 -$2.5 -35.5% 5 1 25

US ETPs (Commodity) 82 4 4 82 $73.1 $79.7 $6.7 9.1% 12 1 80

US ETPs (Mixed) 1 1 - 1 $0.0 $0.1 $0.1 100.0% 1 1 0

US ETPs (Fixed Income) 2 - 2 2 - $0.0 $0.0 100.0% 2 1 0

Europe ETPs (Alternative) 3 - 1 8 $0.0 $0.1 $0.1 100.0% 1 3 0

Europe ETPs (Commodity) 311 41 150 745 $15.7 $18.5 $2.8 18.2% 9 6 20

Europe ETPs (Currency) 58 22 40 111 $0.0 $0.2 $0.1 677.4% 1 3 0

Europe ETPs (Equity) 8 - 8 13 - $0.0 $0.0 100.0% 2 3 0

Europe ETPs (HOLDRS) - - - 2 - - - - - - 0

India ETPs (Commodity) 7 1 1 7 $0.2 $0.4 $0.1 55.7% 7 1 7

Japan ETPs (Commodity) 9 1 7 29 $0.3 $0.3 $0.1 25.8% 4 2 1

South Africa ETPs (Commodity) 1 - - 1 $1.9 $1.9 $0.0 1.5% 1 1 3

South Africa ETPs (Fixed Income) 1 - - 1 $0.0 $0.0 $0.0 0.0% 1 1 0

UAE ETPs (Commodity) 1 1 - 1 $0.0 $0.0 $0.0 6.8% 1 1 1

Israel ETPs 292 26 5 292 $13.0 $12.6 -$0.4 -3.0% 7 1 0

Australia ETPs (Commodity) 5 4 - 5 $0.6 $0.6 $0.0 2.0% 1 1 0

South Korea ETPs (Commodity) 1 - - 1 $0.0 $0.0 $0.0 -41.2% 1 1 0

Canada ETPs (Commodity) 1 - 1 7 $0.0 $0.4 $0.4 100.0% 1 1 0

Canada ETPs (Alternative) - - - 4 - - - - - 1 0

Canada ETPs (Equity) - - - 2 - - - - - 1 0

Canada ETPs (Currency) - - - 8 - - - - - 1 0

Mexico ETPs (Commodity) - - - 11 - - - - - 1 0

Mexico ETPs (Currency) - - - 12 - - - - - 1 0

Hong Kong ETPs (Commodity) - - - 1 - - - - - 1 1

Singapore ETPs (Commodity) - - - 2 - - - - - 1 0

Botswana ETPs (Commodity) - - - 1 - - - - - 1 0

Malaysia ETPs (Commodity) - - - - - - - - - - 1

Thailand ETPs (Commodity) - - - - - - - - - - 1 ETPs (Commodities) Total 424 52 168 899 $91.7 $102.6 $10.0 12.0% 36 20 115 ETPs Total 849 108 222 1,415 $119.7 $128.6 $9.7 7.4% 47 20 141 ETF/ETP Total 3,131 531 590 6,287 $1,155.8 $1,223.7 $68.8 5.9% 150 45 1,111 To avoid double counting, assets shown above refer only to primary listings. New in 2009, 2010 and # Providers also refers only to primary listings. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, Bank of Israel.



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According to the Investment Company Institute (ICI), at the end of Q1 2010 there were 65,971 mutual funds worldwide with assets of US$23.02 trillion, up from US$22.95 trillion in 65,711 funds at the end of 2009.

Figure 16: Global mutual fund industry Q1 Q2 Q3 Q4 Q1 ASSETS (US$ Bn) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2008 2009 2009 2010 Total Assets 11,655 11,324 14,048 16,165 17,757 21,808 26,131 18,919 18,166 20,339 22,379 22,953 23,015

Equity 5,134 4,204 5,923 7,219 8,333 10,508 12,440 6,497 5,925 7,247 8,534 8,948 9,217

Bond 2,212 2,534 3,047 3,313 3,450 3,871 4,278 3,388 3,381 3,848 4,359 4,545 4,736

Money Market 2,986 3,190 3,206 3,323 3,351 3,848 4,940 5,786 5,800 5,718 5,515 5,317 4,840

Balanced/Mixed 942 918 1,198 1,445 1,566 2,049 2,638 1,774 1,669 1,947 2,230 2,347 2,379

Other 190 229 311 398 512 676 884 676 641 732 813 840 862

# Funds 52,849 54,110 54,569 54,982 56,867 61,854 66,347 68,574 67,002 66,478 66,110 65,711 65,971 Source: Investment Company Institute (ICI).

Assets US$ Bn # Mutual funds



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Globally, open-end mutual funds (excluding ETFs) have seen US$283.3 Bn net outflows during the first six months of 2010 according to data from Strategic Insight. International/Offshore (which includes Dublin and Luxembourg) funds were the most popular with US$72.6 Bn net inflows, followed by funds in Japan with US$33.6 Bn while US funds experienced net outflows of US$331.0 Bn.

Figure 17: Global mutual fund flows (excluding ETFs) REGION (US$ Bn) 2005 2006 2007 2008 2009 YTD JUN-10 Asia Pacific (ex-Japan) 48.0 75.9 326.7 15.6 29.4 -29.0

Japan 73.9 113.2 127.1 17.7 38.8 33.6

Europe 233.3 126.7 -129.1 -349.8 77.8 -29.5

International/Offshore 317.3 334.7 234.5 -244.7 90.0 72.6

US 272.4 452.5 873.7 421.5 -143.3 -331.0 Total 944.9 1103.1 1433.0 -139.8 92.6 -283.3 Source: Strategic Insight Simfund Global. Globally, ETFs have seen US$71.3 Bn net inflows during the first six months of 2010 according to data from Strategic Insight. US listed ETFs were the most popular with US$38.8 Bn net inflows, followed by International/Offshore (which includes Dublin and Luxembourg) with US$15.1 Bn and Asia Pacific (ex-Japan) with with net inflows of $8.4 Bn.

Figure 18: Global ETF fund flows REGION (US$ Bn) 2005 2006 2007 2008 2009 YTD JUN-10 Asia Pacific (ex-Japan) 2.1 1.4 2.2 16.2 4.8 8.4

Japan -4.9 2.3 3.1 3.3 -5.3 2.1

Europe 9.3 14.5 7.0 34.4 15.7 6.9

International/Offshore 5.2 7.8 18.5 42.5 35.6 15.1

US 53.7 68.7 149.7 176.0 117.5 38.8 Total 65.4 94.8 180.5 272.5 168.3 71.3 Includes ETFs of all legal structures (open-end, UIT, Grantor Trusts, Partnerships) and Exchange Traded Notes.

Source: Strategic Insight Simfund Global.

Net New Flows US$ Bn




ETFs IN THE UNITED STATES In the US there were 866 ETFs, assets of US$741.3 Bn, from 30 providers on two exchanges at the end of July 2010. ETF AUM in US listed ETFs increased by 5.1% YTD to US$741.3 Bn, compared to the 1.3% decrease in the MSCI US Index in US dollar terms. YTD 117 new ETFs have been launched in the US with another 808 new ETFs in the pipeline, while 23 ETFs were delisted. iShares is the leading ETF provider in the US, based on both the number of products, 210, and AUM of US$378.9 Bn, a 51.1% market share, followed by State Street Global Advisors with 91 ETFs and AUM of US$141.7 Bn, a 19.1% market share. Additionally, there were 151 other ETPs listed in the US with assets of US$93.6 Bn, from 18 providers on one exchange at the end of July 2010.

29 January 2010 marked the 17th anniversary of ETFs in the US. Since the launch of the SPDR S&P 500 (SPY US) on 29 January 1993, it has grown to be the largest ETF globally and the most liquid equity security traded anywhere in the world. FINRA, the Financial Industry Regulatory Authority which regulates all securities firms doing business in the US, issued a regulatory notice in June 2009 to provide guidance on leveraged and inverse ETFs. The following is taken from the Notice: Exchange-traded funds (ETFs) that offer leverage or that are designed to perform inversely to the index or benchmark they track – or both – are growing in number and popularity. While such products may be useful in some sophisticated trading strategies, they are highly complex financial instruments that are typically designed to achieve their stated objectives on a daily basis. Due to the effects of compounding, their performance over longer periods of time can differ significantly from their stated daily objective. Therefore, inverse and leveraged ETFs that are reset daily, typically, are unsuitable for retail investors who plan to hold them for longer than one trading session, particularly in volatile markets.

Figure 19: ETF listings in the United States, as at end July 2010

United States P Listings: 866 T Listings: 866 Providers: 30 AUM: US$741.3 Bn

P Listings = # Primary listings T Listings = # Total listings Providers = # Primary ETF Providers AUM = Assets Under Management in primary listings only


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Figure 20: US listed ETF and ETP asset growth ASSETS (US$ Bn) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 JUL-10 ETF Assets $0.5 $0.4 $1.1 $2.4 $6.7 $15.6 $33.9 $65.6 $84.6 $102.3 $150.7 $227.7 $299.4 $406.8 $580.7 $497.1 $705.5 $741.3 ETP Assets $2.0 $5.0 $3.8 $4.0 $6.1 $8.9 $14.4 $25.9 $40.5 $45.3 $88.1 $93.6 ETF/ETP Total Assets $0.5 $0.4 $1.1 $2.4 $6.7 $15.6 $35.8 $70.6 $88.4 $106.3 $156.8 $236.6 $313.8 $432.8 $621.2 $542.5 $793.6 $834.9 # ETFs 1 1 2 19 19 29 30 81 101 113 117 152 201 343 601 698 772 866 # ETPs 2 14 17 17 17 17 20 37 71 136 142 151 # ETFs/ETPs Total 1 1 2 19 19 29 32 95 118 130 134 169 221 380 672 834 914 1,017 Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 21: Top five US ETF providers by average daily turnover, as at end July 2010 AVERAGE DAILY TURNOVER (US$ MN) % MARKET % MARKET CHANGE % PROVIDER DEC-09 SHARE JUL-10 SHARE (US$ MN) CHANGE SSgA $19,815.3 43.3% $29,841.2 48.6% $10,025.9 50.6%

iShares $12,954.7 28.3% $15,541.4 25.3% $2,586.7 20.0%

ProShares $3,890.4 8.5% $5,779.3 9.4% $1,888.8 48.6%

Direxion Shares $3,446.7 7.5% $3,937.1 6.4% $490.5 14.2%

PowerShares $3,209.8 7.0% $3,687.1 6.0% $477.4 14.9%

Others $2,471.4 5.4% $2,677.4 4.4% $206.1 8.3% Total $45,788.2 100.0% $61,463.6 100.0% $15,675.4 34.2% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Assets US$ Bn # Products



Figure 22: ETF providers in the US ranked by AUM, as at end July 2010

JUL-10 YTD CHANGE AUM # JUL NNA YTD NNA AUM % % MARKET PROVIDER # ETFs (US$ BN) % TOTAL PLANNED (US$ BN) (US$ BN) # ETFs % ETFs (US$ BN) AUM SHARE iShares 210 $378.9 51.1% 12 $6.6 $17.3 24 12.9% $14.5 4.0% -0.5%

State Street Global Advisors 91 $141.7 19.1% 33 $1.0 -$5.2 3 3.4% -$8.1 -5.4% -2.1%

Vanguard 46 $112.9 15.2% 21 $2.8 $19.9 0 0.0% $20.9 22.7% 2.2%

PowerShares 117 $34.6 4.7% 38 $0.5 $1.5 11 10.4% $1.0 2.9% -0.1%

ProShares 99 $23.7 3.2% 98 $0.6 $3.2 21 26.9% $0.5 2.3% -0.1%

Van Eck Associates Corp 26 $14.1 1.9% 18 -$0.3 $1.7 3 13.0% $1.7 13.4% 0.1%

Bank of New York 1 $9.1 1.2% 0 $0.0 $0.4 0 0.0% $0.5 6.3% 0.0%

WisdomTree Investments 42 $6.8 0.9% 69 $0.0 $0.7 -10 -19.2% $0.3 4.6% 0.0%

Direxion Shares 38 $6.2 0.8% 147 $0.0 $1.8 12 46.2% $1.2 22.9% 0.1%

Rydex 19 $3.2 0.4% 82 -$0.3 $0.4 -12 -38.7% $0.2 5.7% 0.0%

Claymore Securities 42 $2.8 0.4% 27 $0.0 $0.0 10 31.3% -$0.1 -2.3% 0.0%

First Trust Advisors 43 $2.8 0.4% 6 $0.0 $0.8 3 7.5% $0.7 36.3% 0.1%

Charles Schwab Investment Management 8 $1.4 0.2% 3 $0.1 $1.1 2 33.3% $1.1 308.4% 0.1%

PIMCO 10 $1.2 0.2% 10 -$0.3 $0.7 1 11.1% $0.7 152.2% 0.1%

RevenueShares 6 $0.5 0.1% 8 $0.0 $0.1 0 0.0% $0.1 43.5% 0.0%

Global X Funds 14 $0.4 0.0% 23 $0.1 $0.2 7 100.0% $0.3 318.0% 0.0%

IndexIQ Advisors 9 $0.2 0.0% 44 $0.0 $0.1 4 80.0% $0.1 78.1% 0.0%

XShares Advisors 5 $0.1 0.0% 34 $0.0 $0.0 0 0.0% $0.0 -13.0% 0.0%

Fidelity Management & Research 1 $0.1 0.0% 0 $0.0 $0.0 0 0.0% $0.0 5.9% 0.0%

Emerging Global Advisors 7 $0.1 0.0% 16 $0.0 $0.1 3 75.0% $0.1 138.9% 0.0%

Old Mutual Global Shares 5 $0.1 0.0% 0 $0.0 $0.0 4 400.0% $0.0 47.5% 0.0%

Jefferies Asset Management 4 $0.1 0.0% 1 $0.0 $0.0 1 33.3% $0.0 -5.5% 0.0%

ALPS ETF Trust 2 $0.1 0.0% 7 $0.0 $0.0 0 0.0% $0.0 160.1% 0.0%

AdvisorShares 3 $0.1 0.0% 5 $0.0 $0.0 2 200.0% $0.0 186.3% 0.0%

Grail Advisors 7 $0.0 0.0% 3 $0.0 $0.0 2 40.0% $0.0 62.1% 0.0%

Geary Advisors 2 $0.0 0.0% 0 $0.0 $0.0 0 0.0% $0.0 97.6% 0.0%

FaithShares 5 $0.0 0.0% 0 $0.0 $0.0 0 0.0% $0.0 -19.0% 0.0%

Javelin Investment Management 2 $0.0 0.0% 0 $0.0 $0.0 1 100.0% $0.0 -62.1% 0.0%

US One Trust 1 $0.0 0.0% 2 $0.0 $0.0 1 100.0% $0.0 0.0% 0.0%

Pax World Management 1 $0.0 0.0% 2 $0.0 $0.0 1 100.0% $0.0 0.0% 0.0%

AllianceBernstein - - - 2 - - - - - - -

Capital West Securities - - - 1 - - - - - - -

Dreyfus Corp - - - 1 - - - - - - -

Eaton Vance - - - 5 - - - - - - -

Exchange Traded Spreads Trust - - - 5 - - - - - - -

Factor Advisors - - - 22 - - - - - - -

FactorShares - - - 5 - - - - - - -

Firsthand Capital - - - 1 - - - - - - -

Florentez Investment - - - 1 - - - - - - -

FocusShares - - - 6 - - - - - - -

Georgetown Investment Management - - - 5 - - - - - - -

Huntington Asset Advisors - - - 2 - - - - - - -

John Hancock - - - 1 - - - - - - -

JP Morgan Asset Management - - - 2 - - - - - - -

Legg Mason - - - 1 - - - - - - -

Macro Securities Depositor - - - 2 - - - - - - -

Next Investments - - - 1 - - - - - - -

Northern Trust - - - 2 - - - - - - -

RiverPark Advisors - - - 2 - - - - - - -

Russell Investments - - - 28 - - - - - - -

ShariahShares - - - 2 - - - - - - -

Spinnaker ETF Trust - - - 1 - - - - - - -

T Rowe Price - - - 1 - - - - - - - Total 866 $741.3 100.0% 808 $10.9 $45.0 94 12.2% $35.8 5.1% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, National Stock Exchange (NSX).



Figure 23: ETP providers in the US ranked by assets, as at end July 2010

JUL-10 YTD CHANGE ASSETS # JUL NNA YTD NNA ASSETS % % MARKET PROVIDER # ETFs (US$ BN) % TOTAL PLANNED (US$ BN) (US$ BN) # ETFs % ETFs (US$ BN) AUM SHARE State Street Global Advisors 1 $48.2 51.4% 0 -$1.4 $5.9 0 0.0% $8.4 21.2% 6.3%

iShares 4 $10.3 11.0% 1 $0.3 $0.4 0 0.0% $0.6 6.6% 0.0%

Deutsche Bank 36 $10.3 11.0% 2 -$0.4 -$2.7 2 5.9% -$3.3 -24.3% -4.4%

Barclays (iPath) 30 $6.6 7.1% 25 $0.4 $0.9 0 0.0% $0.7 11.4% 0.3%

United States Commodity Funds 8 $5.0 5.4% 1 -$0.3 -$1.4 1 14.3% -$2.5 -33.1% -3.2%

Merrill Lynch 17 $4.7 5.0% 0 $0.2 -$0.1 0 0.0% -$0.6 -10.7% -0.9%

Rydex 9 $2.4 2.6% 13 -$0.1 -$0.2 0 0.0% -$0.3 -9.8% -0.5%

ETF Securities 4 $1.6 1.7% 20 $0.0 $1.0 2 100.0% $1.1 221.5% 1.1%

JPMorgan Chase 2 $1.5 1.7% 0 $0.2 $0.7 0 0.0% $0.8 115.8% 0.8%

ProShares 12 $1.5 1.6% 38 -$0.2 $0.4 0 0.0% $0.5 43.9% 0.4%

Swedish Export Credit Corp 7 $0.8 0.9% 0 -$0.1 $0.0 0 0.0% -$0.1 -8.2% -0.1%

GreenHaven Commodity Services 1 $0.3 0.3% 0 $0.0 $0.0 0 0.0% $0.0 14.8% 0.0%

Morgan Stanley 4 $0.1 0.1% 0 $0.0 $0.0 0 0.0% $0.0 41.6% 0.0%

Barclays Capital 9 $0.1 0.1% 0 $0.0 $0.0 1 12.5% $0.0 40.4% 0.0%

Goldman Sachs 2 $0.1 0.1% 0 $0.0 $0.0 0 0.0% $0.0 -7.1% 0.0%

HSBC USA 1 $0.1 0.1% 0 $0.0 $0.0 0 0.0% $0.0 -23.0% 0.0%

Credit Suisse 3 $0.1 0.1% 0 $0.0 $0.1 2 200.0% $0.1 1819.2% 0.1%

Teucrium Trading 1 $0.0 0.0% 0 $0.0 $0.0 1 0.0% $0.0 0.0% 0.0%

Claymore Securities - - - 2 - - - - - - -

Jefferies Asset Management - - - 2 - - - - - - -

Sprott Asset Management - - - 1 - - - - - - -

WealthNotes Capital Management - - - 1 - - - - - - - Total 151 $93.6 100.0% 106 -$1.3 $5.0 9 6.3% $5.5 6.3% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 24: Top 10 ETFs in the US by AUM, as at end July 2010 AUM ADV ADV ETF TICKER (US$ MN) (‘000 SHARES) (US$ MN) SPDR S&P 500 SPY US $72,000.9 218,965 $23,559.1

iShares MSCI Emerging Markets Index Fund EEM US $38,989.6 63,786 $2,529.3

iShares MSCI EAFE Index Fund EFA US $33,585.2 23,984 $1,200.4

Vanguard Emerging Markets VWO US $29,124.4 13,606 $545.3

iShares S&P 500 Index Fund IVV US $21,860.9 3,663 $395.0

iShares Barclays TIPS Bond Fund TIP US $20,498.5 548 $58.0

PowerShares QQQ Trust QQQQ US $18,791.4 79,931 $3,569.3

iShares Russell 2000 Index Fund IWM US $14,955.1 70,540 $4,421.7

Vanguard Total Stock Market ETF VTI US $14,196.9 1,863 $101.6

iShares iBoxx $ Investment Grade Corporate Bond Fund LQD US $13,987.2 825 $89.7 Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 25: Top 10 ETFs in the US by average daily US dollar trading volume, as at end July 2010 ADV ADV AUM ETF TICKER (US$ MN) (‘000 SHARES) (US$ MN) SPDR S&P 500 SPY US $23,559.1 218,965 $72,000.9

iShares Russell 2000 Index Fund IWM US $4,421.7 70,540 $14,955.1

PowerShares QQQ Trust QQQQ US $3,569.3 79,931 $18,791.4

iShares MSCI Emerging Markets Index Fund EEM US $2,529.3 63,786 $38,989.6

ProShares UltraShort S&P500 SDS US $1,435.5 41,572 $3,521.4

iShares MSCI EAFE Index Fund EFA US $1,200.4 23,984 $33,585.2

Financial Select Sector SPDR Fund XLF US $1,141.0 79,843 $5,906.3

Direxion Daily Financial Bull 3x Shares FAS US $1,073.3 51,197 $1,649.7

iShares MSCI Brazil Index Fund EWZ US $1,050.1 15,767 $9,479.4

SPDR DJ Industrial Average ETF DIA US $1,041.3 10,227 $8,524.6




0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

0

2,000

4,000

6,000

8,000

10,000

Figure 26: Top 10 ETFs in the US with largest change in AUM, as at end July 2010 AUM (US$ MN) AUM (US$ MN) CHANGE ETF TICKER JUL-10 DEC-09 (US$ MN) SPDR S&P 500 SPY US $72,000.9 $85,676.3 -$13,675.5

Vanguard Emerging Markets VWO US $29,124.4 $19,398.7 $9,725.7

iShares Barclays Short Treasury Bond Fund SHV US $4,077.4 $1,752.1 $2,325.3

Vanguard Total Bond Market ETF BND US $8,344.6 $6,268.4 $2,076.2

iShares Barclays TIPS Bond Fund TIP US $20,498.5 $18,551.8 $1,946.7

iShares Barclays 1-3 Year Credit Bond Fund CSJ US $6,844.7 $4,908.3 $1,936.4

iShares Russell 2000 Index Fund IWM US $14,955.1 $13,115.1 $1,840.1

Vanguard Short-Term Bond ETF BSV US $5,498.2 $3,696.6 $1,801.6

iShares MSCI EAFE Index Fund EFA US $33,585.2 $35,339.3 -$1,754.2

iShares FTSE/Xinhua China 25 Index Fund FXI US $8,222.1 $9,975.3 -$1,753.2


Figure 27: United States mutual fund industry, as at end Q2 2010 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q2-10 Assets (US$ Bn) 4,468 5,525 6,846 6,965 6,975 6,391 7,414 8,107 8,905 10,413 12,020 9,602 11,121 10,504

# Funds 6,684 7,314 7,791 8,156 8,307 8,250 8,126 8,042 7,975 8,117 8,119 8,020 7,691 7,618

In the United States, Bank of New York, Claymore Securities, Emerging Global Advisors, Global X Funds, iShares, PowerShares, ProShares, Rydex, State Street Global Advisors, Van Eck Associates Corp, Vanguard, WisdomTree Investments and XShares Advisors are among the ETF providers who have been granted the exemptive order from the US Securities and Exchange Commission (SEC) permitting mutual funds to invest in their ETFs in excess of the limits of sections 12(d)(1).

Section 12(d)(1) of the Investment Company Act of 1940 prohibits an investment company from 1) acquiring more than 3% of the total outstanding voting securities of another investment company, 2) investing more than 5% of its total assets in a single investment company, and 3) investing more than 10% of its total assets in two or more investment companies. The combined assets of the nation’s 7,618 mutual funds decreased by US$617 Bn YTD, or 5.5% to US$10.5 trillion at the end of Q2 2010, according to the Investment Company Institute’s official survey of the mutual fund industry.

Source: Investment Company Institute (ICI), Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Assets US$ Bn # Mutual fundsAssets US$ Bn Assets US$ Bn Assets US$ Bn # Mutual funds



-600

-400

-200

0

200

400

600

800

1,000

-20

0

20

40

60

80

100

120

140

160

180

In the US, open-end mutual funds (excluding ETFs) have seen US$331.0 Bn net outflows during the first six months of 2010 according to data from Strategic Insight. Bond funds were the most popular with US$136.7 Bn net inflows, followed by international equity with US$33.0 Bn net inflows, while the least popular were money market funds which experienced net outflows of US$502.1 Bn. Figure 28: US mutual fund flows (excluding ETFs), as at end Q2 2010 EXPOSURE (US$ Bn) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 YTD Q2-10 Domestic Equity 207.7 80.3 14.7 137.4 132.5 52.0 1.2 -39.8 -137.3 -26.6 1.4

International Equity 46.3 -19.2 5.9 37.7 89.6 129.1 164.6 162.7 -58.0 41.2 33.0

Bond -47.0 78.6 132.1 36.1 -7.9 28.1 58.2 97.7 22.2 348.0 136.7

Money Market 170.6 397.3 -13.0 -222.1 -137.1 63.1 228.6 653.2 594.6 -505.9 -502.1 Total 377.5 537.1 139.7 -10.8 77.0 272.4 452.5 873.7 421.5 -143.3 -331.0 Includes US registered open-end funds (excluding ETFs, ETNs and variable annuities).

Source: Strategic Insight Simfund MF.

In the US, ETFs have seen US$38.8 Bn net new inflows during the first six months of 2010 according to data from Strategic Insight. Bond funds were the most popular with US$21.3 Bn net inflows, followed by domestic equity funds with US$9.8 Bn net inflows, while money market funds were the least popular with US$1.5 Bn net outflows. Figure 29: US ETF fund flows, as at end Q2 2010

EXPOSURE (US$ Bn) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 YTD Q2-10 Domestic Equity 41.9 27.7 36.5 8.4 35.6 24.3 35.7 87.8 133.5 30.5 9.8

International Equity 0.7 1.3 3.8 5.7 15.3 23.0 26.8 46.6 19.6 37.0 9.2

Bond 0.0 0.0 3.8 0.6 3.6 6.3 5.1 13.1 22.5 46.1 21.3

Money Market 0.0 0.0 0.0 0.0 0.0 0.1 1.1 2.2 0.4 4.0 -1.5 Total 42.6 29.1 44.0 14.7 54.6 53.7 68.7 149.7 176.0 117.5 38.8 Includes ETFs of all legal structures (open-end, UIT, Grantor Trusts, Partnerships) and Exchange Traded Notes.

Source: Strategic Insight Simfund MF.





Figure 30: Average expenses of ETFs versus open-end mutual funds in the US AVERAGE EXPOSURE TER (bps) Exchange Traded Funds* Active 57

Broad Market - Equity 18

Commodities 57

Currency 48

Custom 44

Fixed Income 22

Growth - Equity 21

International - Equity 42

Inverse 95

Large-Cap - Equity 13

Leveraged 95

Leveraged Inverse 95

Mid-Cap - Equity 22

Sector - Equity 32

Small-Cap - Equity 21 Value - Equity 21 Total – Equity ETFs 34

Total – Fixed Income ETFs 25 Total – All 33 Open-End Mutual Funds** Passive/Indexed Domestic Equity 93

Passive/Indexed International Equity 83

Passive/Indexed Fixed Income 40

Actively Managed Domestic Equity 146

Actively Managed International Equity 160

Actively Managed Fixed Income 105 *As at end February 2010. **Captured from Morningstar on 15 March 2010. Source: Morningstar, Global ETF Research and Implementation Strategy Team, BlackRock.



Large-Cap - Equity, 18.3%Fixed Income, 17.2%Emerging Markets - Equity, 15.2%International - Equity, 12.9%Sector - Equity, 10%Growth - Equity, 4.5%Value - Equity, 4.1%Broad Market - Equity, 3.6%Small-Cap - Equity, 3.5%Mid-Cap - Equity, 3.3%Leveraged Inverse, 2.1%Custom, 1.9%Leveraged, 1.3%Commodities, 1.1%Inverse, 0.6%Currency, 0.2%Active, 0.1%

Figure 31: US ETF assets by type of exposure, as at end July 2010 JUL-10 YTD CHANGE AUM AUM % % MARKET EXPOSURE # ETFs (US$ BN) % TOTAL # ETFs % ETFs (US$ BN) AUM SHARE Equity 528 $559.9 75.5% 44 9.1% $1.7 0.3% -3.6%

Large-Cap - Equity 39 $136.0 18.3% -1 -2.5% -$14.4 -9.6% -3.0%

Emerging Markets - Equity 82 $112.6 15.2% 18 28.1% $8.7 8.4% 0.5%

International - Equity 161 $95.9 12.9% 13 8.8% -$1.1 -1.2% -0.8%

Sector - Equity 143 $74.5 10.0% 9 6.7% $2.3 3.1% -0.2%

Growth - Equity 27 $33.2 4.5% 0 0.0% -$2.1 -6.0% -0.5%

Value - Equity 27 $30.6 4.1% 0 0.0% $1.2 4.0% 0.0%

Broad Market - Equity 19 $26.6 3.6% 5 35.7% $2.4 9.7% 0.2%

Small-Cap - Equity 18 $25.9 3.5% 0 0.0% $2.8 12.0% 0.2%

Mid-Cap - Equity 12 $24.8 3.3% 0 0.0% $2.0 8.6% 0.1%

Fixed Income 100 $127.4 17.2% 15 17.6% $25.6 25.1% 2.8%

Leveraged Inverse 59 $15.4 2.1% 5 9.3% $0.8 5.6% 0.0%

Custom 60 $13.9 1.9% 2 3.4% $4.9 53.5% 0.6%

Leveraged 60 $10.0 1.3% 12 25.0% -$0.9 -8.6% -0.2%

Commodities 18 $8.5 1.1% 7 63.6% $1.6 22.7% 0.2%

Inverse 15 $4.4 0.6% 4 36.4% $1.5 53.7% 0.2%

Currency 8 $1.2 0.2% 0 0.0% $0.3 34.3% 0.0%

Active 18 $0.5 0.1% 5 38.5% $0.4 332.5% 0.1% Total 866 $741.3 100.0% 94 12.2% $35.8 5.1%




S&P, 28.4%MSCI, 28.3%Barclays Capital, 13.9%Russell, 9.1%Dow Jones, 4.7%NASDAQ OMX, 3.1%Markit, 2.7%FTSE, 2.6%NYSE Euronext, 1%WisdomTree, 0.8%Indxis, 0.5%Deutsche Boerse, 0.5%Intellidex, 0.3%BNY Mellon, 0.3%Morningstar, 0.2%S-Network, 0.1%Zacks, 0.1%Value Line, 0%STOXX, 0%CAC, 0%Hang Seng, 0%Topix, 0%Other, 3.4%

Figure 32: US ETF assets by index provider, as at end July 2010 JUL-10 YTD CHANGE AUM AUM % % MARKET INDEX PROVIDER # ETFs (US$ BN) % TOTAL # ETFs % ETFs (US$ BN) AUM SHARE S&P 161 $210.5 28.4% 11 7.3% -$7.3 -3.4% -2.5%

MSCI 109 $209.9 28.3% 22 25.3% $11.9 6.0% 0.3%

Barclays Capital 58 $102.9 13.9% 6 11.5% $21.7 26.7% 2.4%

Russell 53 $67.6 9.1% 2 3.9% $1.9 2.9% -0.2%

Dow Jones 89 $35.1 4.7% 4 4.7% -$1.7 -4.5% -0.5%

NASDAQ OMX 27 $22.9 3.1% 4 17.4% $0.2 0.8% -0.1%

Markit 2 $19.9 2.7% 0 0.0% $2.6 15.1% 0.2%

FTSE 48 $19.0 2.6% 10 26.3% $0.5 2.5% -0.1%

NYSE Euronext 10 $7.1 1.0% 2 25.0% $1.0 15.9% 0.1%

WisdomTree 35 $5.9 0.8% -10 -22.2% $0.1 2.1% 0.0%

Indxis 6 $3.9 0.5% 0 0.0% $1.3 49.2% 0.2%

Deutsche Boerse 3 $3.6 0.5% 0 0.0% $0.0 1.3% 0.0%

Intellidex 37 $2.3 0.3% 0 0.0% -$0.2 -9.6% -0.1%

BNY Mellon 10 $2.0 0.3% 0 0.0% $0.0 -2.3% 0.0%

Morningstar 10 $1.6 0.2% 0 0.0% -$0.1 -4.6% 0.0%

S-Network 12 $1.0 0.1% 2 20.0% -$0.1 -6.6% 0.0%

Zacks 13 $0.5 0.1% 0 0.0% $0.0 2.0% 0.0%

Value Line 3 $0.2 0.0% -2 -40.0% -$0.1 -23.8% 0.0%

STOXX 3 $0.2 0.0% 0 0.0% $0.0 -12.0% 0.0%

CAC 0 $0.0 0.0% 0 0.0% $0.0 0.0% 0.0%

Hang Seng 0 $0.0 0.0% 0 0.0% $0.0 0.0% 0.0%

Topix 0 $0.0 0.0% 0 0.0% $0.0 0.0% 0.0%

Other 177 $24.9 3.4% 43 32.1% $4.1 19.7% 0.4% Total 866 $741.3 100.0% 94 12.2% $35.8 5.1% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



Figure 33: Sector ETF net new assets

Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. ADV – Average Daily Volume, AUM – Assets Under Management, NNA – Net New Assets. Data as at end July 2010. Source: Global ETF Research & Implementation Strategy Team, BlackRock, National Stock Exchange (NSX).

JUL YTD 30-JULYTD %

CHANGE

DOW JONES U.S. SECTOR ETFs 5,425.1 -7.9% 246.8 163.7 -43.8 -331.7 -28.2iShares Dow Jones U.S. Basic Materials IYM US DJUSBM 11.9% 0.7% 659.2 -19.2% 61.6 54.6 -2.3 -161.4 246.4iShares Dow Jones U.S. Consumer Goods IYK US DJUSNC 7.5% 4.4% 267.1 -18.5% 2.2 2.0 -19.6 -70.9 -105.4iShares Dow Jones U.S. Consumer Services IYC US DJUSCY 6.7% 3.8% 209.4 30.1% 14.2 5.2 0.0 48.8 -11.6iShares Dow Jones U.S. Energy IYE US DJUSEN 7.8% -6.3% 614.1 -14.5% 5.8 5.2 -24.5 -54.5 9.6iShares Dow Jones U.S. Financial IYF US DJUSFN 6.9% 2.9% 470.7 -1.1% 44.6 58.9 -16.7 -13.9 -105.5iShares Dow Jones U.S. Healthcare IYH US DJUSHC 1.2% -7.1% 536.0 -13.4% 35.5 4.4 -26.5 -28.6 -356.3iShares Dow Jones U.S. Industrial IYJ US DJUSIN 9.3% 6.3% 325.1 12.5% 7.8 5.4 -1.9 21.5 -11.7iShares Dow Jones U.S. Technology IYW US DJUSTC 7.4% -3.3% 1,255.2 -7.7% 27.2 13.1 -27.9 -42.6 263.3iShares Dow Jones U.S. Telecommunications IYZ US DJSTELT 9.1% 3.7% 616.7 -3.2% 38.2 11.0 49.7 -22.1 106.8iShares Dow Jones U.S. Utilities IDU US DJUSUT 7.3% -0.1% 471.7 -3.7% 9.7 3.9 25.9 -8.0 -63.9

S&P EQUAL WEIGHT SECTOR ETFs 318.8 16.7% 2.2 2.7 -8.3 48.4 100.3Rydex S&P Equal Weight Consumer Discretionary RCD US S25 7.8% 5.3% 25.0 36.9% 1.4 0.4 -3.6 6.9 2.3Rydex S&P Equal Weight Consumer Staples RHS US S30 5.8% 6.1% 13.1 32.9% 0.0 0.1 0.0 2.5 -1.9Rydex S&P Equal Weight Energy RYE US S10 8.4% -2.4% 14.7 -16.4% 0.0 0.3 0.0 -3.0 9.3Rydex S&P Equal Weight Financial RYF US S40 7.8% 7.9% 19.8 43.4% 0.0 0.1 0.0 5.2 1.0Rydex S&P Equal Weight Health Care RYH US S35 1.0% -5.2% 62.0 -9.2% 0.1 0.2 0.0 -2.7 -1.4Rydex S&P Equal Weight Industrial RGI US S20 9.5% 6.8% 37.2 90.5% 0.3 0.2 0.0 16.5 8.4Rydex S&P Equal Weight Materials RTM US S15 12.0% 2.0% 29.5 -13.9% 0.1 0.5 -2.4 -5.3 17.8Rydex S&P Equal Weight Technology RYT US S45 6.9% -1.2% 105.9 32.4% 0.0 0.8 -2.3 28.3 58.5Rydex S&P Equal Weight Utilities RYU US S55 7.3% -1.6% 11.8 0.5% 0.2 0.1 0.0 0.0 6.4

S&P SELECT SECTOR ETFs 33,284.1 6.2% 8,201.2 4,117.8 2,003.7 2,572.1 3,483.0Consumer Discretionary Select Sector SPDR XLY US IXY 7.8% 6.1% 1,824.0 24.7% 1,013.0 277.4 320.8 305.4 493.0Consumer Staples Select Sector SPDR XLP US IXR 5.8% 3.2% 3,206.0 41.1% 397.1 208.7 538.4 894.6 -117.0Energy Select Sector SPDR XLE US IXE 8.4% -4.6% 6,273.3 11.7% 1,695.8 804.9 562.7 980.7 195.0Financial Select Sector SPDR XLF US IXM 6.7% 2.8% 5,902.3 -13.8% 2,034.5 1,229.0 -392.5 -1,005.4 -1,805.0Health Care Select Sector SPDR XLV US IXV 1.3% -7.5% 2,758.4 -5.9% 672.0 254.7 100.0 40.2 599.0Industrial Select Sector SPDR XLI US IXI 10.4% 9.9% 3,162.0 52.0% 777.4 540.0 118.5 949.8 631.0Materials Select Sector SPDR XLB US IXB 13.0% -2.5% 1,992.1 10.7% 574.0 316.4 104.5 285.5 469.0Technology Select Sector SPDR XLK US IXT 7.5% -3.5% 4,305.2 -7.9% 566.1 249.4 72.9 -160.8 1,545.0Utilities Select Sector SPDR XLU US IXU 7.6% -0.1% 3,860.8 5.3% 471.3 237.4 578.3 282.0 1,473.0

2009 NET FLOWS (US$ MN)

ETF AUM (US$ MN)

INDEX TOTAL RETURN (US$)

ETF ADV(US$ MN)

JULY 2010 NET FLOWS (US$ MN)

YTD 2010 NET FLOWS (US$ MN)

ETF SHORT

INTEREST(US$ MN)

15-JULSECTORETF

TICKERINDEX TICKER



Figure 33 (continued): Sector ETF net new assets

Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. ADV – Average Daily Volume, AUM – Assets Under Management, NNA – Net New Assets. Data as at end July 2010. Source: Global ETF Research & Implementation Strategy Team, BlackRock, National Stock Exchange (NSX).

JUL YTD 30-JULYTD %

CHANGE

MSCI US INVESTABLE MARKET SECTOR ETFs 5,790.8 7.8% 54.9 35.8 110.2 786.1 3,017.9Vanguard Consumer Discretionary VCR US MZUSI0CD 7.9% 6.8% 246.0 25.3% 0.3 2.7 -9.9 37.6 60.2Vanguard Consumer Staples VDC US MZUSI0CS 6.0% 1.5% 590.5 2.1% 1.0 2.6 -6.8 -6.6 -59.6Vanguard Energy VDE US MSCIEN 7.9% -6.6% 1,128.3 8.9% 22.2 6.6 22.9 157.8 302.2Vanguard Financials VFH US MZUSI0FN 6.9% 3.5% 504.9 0.3% 4.4 4.6 -3.0 -12.1 39.7Vanguard Health Care VHT US MZUSI0HC 1.0% -7.1% 583.6 -2.1% 0.6 2.4 5.1 28.0 -20.0Vanguard Industrials VIS US MSCIIN 9.8% 7.4% 324.3 -3.3% 0.6 2.0 -5.4 -36.9 103.3Vanguard Information Technology VGT US MZUSI0IT 7.2% -3.8% 1,172.8 20.0% 4.2 6.9 26.4 241.0 408.7Vanguard Materials VAW US MZUSI0MT 11.8% -1.8% 452.7 -7.7% 11.0 3.8 0.0 -30.3 203.1Vanguard Telecommunication Services VOX US MSCITC 8.0% -3.5% 231.8 17.2% 1.8 1.3 5.8 27.8 15.2Vanguard Utilities VPU US MZUSI0UT 7.1% -1.7% 555.9 21.1% 8.9 2.9 12.7 102.9 139.9Vanguard REIT VNQ US RMZ 9.7% 15.9% 5,663.1 20.8% 129.0 153.4 62.3 276.7 1,825.2

S&P GLOBAL SECTOR ETFs 4,064.4 -8.5% 32.4 28.1 -29.8 -67.6 1,120.5iShares S&P Global Consumer Discretionary RXI US SGD 8.4% 3.3% 96.5 12.7% 0.0 1.6 0.0 9.1 44.4iShares S&P Global Consumers Staples KXI US SGCS 6.0% 1.9% 299.3 -4.7% 1.9 1.9 -8.5 -13.5 58.4iShares S&P Global Energy IXC US SGES 9.4% -8.8% 1,004.8 -7.3% 4.1 5.4 10.0 37.3 337.7iShares S&P Global Financials IXG US SGFS 11.8% -1.7% 265.9 -20.2% 22.4 2.7 2.2 -53.2 83.9iShares S&P Global Healthcare IXJ US SGH 1.4% -8.2% 463.7 -12.7% 0.1 2.6 0.0 -9.4 -110.0iShares S&P Global Industrials EXI US SGN 9.6% 5.8% 173.3 11.7% 0.4 2.8 -18.0 12.3 66.5iShares S&P Global Materials MXI US SGM 9.9% -5.0% 778.8 -14.6% 1.8 3.7 -5.6 -65.7 473.3iShares S&P Global Technology IXN US SGI 7.4% -3.1% 490.9 8.2% 1.0 3.0 -7.9 61.7 61.7iShares S&P Global Telecommunications IXP US SGT 10.1% 0.4% 291.3 -9.8% 0.7 2.8 0.0 -20.2 52.8iShares S&P Global Utilities JXI US SGU 8.5% -6.1% 199.8 -20.6% 0.1 1.8 -2.1 -26.1 51.7

MSCI ACWI ex US SECTOR ETFs 47.5 100.0% N/A 0.5 46.2 46.2 N/AiShares MSCI ACWI ex US Consumer Discretionary AXDI US MSWDUCDN 8.5% 1.9% 5.5 100.0% N/A 0.0 5.3 5.3 N/AiShares MSCI ACWI ex US Consumer Staples AXSL US MSWDUCSN 5.9% 1.4% 5.4 100.0% N/A 0.0 5.4 5.4 N/AiShares MSCI ACWI ex US Energy AXEN US MSWDUENN 9.6% -10.8% 5.2 100.0% N/A 0.1 5.1 5.1 N/AiShares MSCI ACWI ex US Health Care AXHE US MSWDUHCN 0.7% -9.3% 5.0 100.0% N/A 0.1 5.0 5.0 N/AiShares MSCI ACWI ex US Industrials AXID US MSWDUINN 8.3% 2.3% 5.2 100.0% N/A 0.1 5.0 5.0 N/AiShares MSCI ACWI ex US Information Technology AXIT US MSWDUITN 6.7% -1.6% 5.3 100.0% N/A 0.0 5.1 5.1 N/AiShares MSCI ACWI ex US Materials AXMT US MSWDUMTN 8.9% -4.8% 5.4 100.0% N/A 0.1 5.1 5.1 N/AiShares MSCI ACWI ex US Telecommunication Services AXTE US MSWDUTCN 10.1% -0.1% 5.3 100.0% N/A 0.0 5.1 5.1 N/AiShares MSCI ACWI ex US Utilities AXUT US MSWDUUTN 7.5% -7.6% 5.2 100.0% N/A 0.0 5.0 5.0 N/A

2009 NET FLOWS (US$ MN)

ETF AUM (US$ MN)

INDEX TOTAL RETURN (US$)

ETF ADV(US$ MN)

JULY 2010 NET FLOWS (US$ MN)

YTD 2010 NET FLOWS (US$ MN)

ETF SHORT

INTEREST(US$ MN)

15-JULSECTORETF

TICKERINDEX TICKER



Figure 34: US ETF and ETP net new assets by type of exposure, as at end July 2010

JULY-2010 #ETFs ADV ASSETS NNA EXPOSURE /ETPs (US$ MN) (US$ MN) (US$ MN) YTD 2010 NNA (US$ MN) 2009 NNA (US$ MN) Equity 738 60,284.7 605,030.1 7,291.1 18,851.6 36,476.3

North America - Equity 453 52,078.5 397,134.0 2,739.5 5,222.3 1,987.0

Active 5 0.1 17.6 - 4.2 12.8

Broad 242 41,073.1 306,736.4 775.5 1,497.7 (11,180.1)

Consumer Goods/Services 26 1,217.4 8,529.6 570.1 1,436.9 287.2

Energy 30 1,861.9 16,804.3 632.3 1,760.9 1,145.3

Financials 29 3,871.9 16,145.4 (403.6) (690.9) 1,409.1

Healthcare 21 382.5 8,054.7 196.8 183.9 (400.8)

Industrials 14 596.9 4,826.3 (13.4) 733.8 914.1

Materials 11 623.7 4,540.7 115.6 71.8 1,206.2

Other 5 10.8 1,894.7 (32.3) (86.8) (77.1)

Real Estate 18 1,391.0 13,276.0 219.6 6.7 4,377.4

Technology 36 798.7 10,199.8 10.2 (85.2) 2,626.7

Telecommunications 6 14.9 1,027.3 61.7 44.7 139.4

Utilities 10 235.6 5,081.2 607.0 344.6 1,526.9

Asia Pacific - Equity 28 464.3 18,045.8 268.9 180.6 1,825.8

Europe - Equity 27 254.3 8,973.0 43.4 705.0 1,574.0

Global - Equity 58 94.6 11,543.3 (7.8) 215.5 3,353.7

Global (ex-US) - Equity 69 1,350.3 54,356.8 13.3 3,138.9 691.4

Emerging Markets - Equity 103 6,042.5 114,977.3 4,233.9 9,389.3 27,044.5

Broad - EM 35 3,283.0 74,702.1 3,596.6 10,427.5 16,691.3

Regional - EM 12 101.2 3,708.2 23.3 (570.2) 1,400.7

Country - EM 56 2,658.4 36,567.0 613.9 (468.0) 8,952.5

Brazil 8 1,067.4 10,266.2 (33.2) (887.3) 2,545.7

Chile 1 14.4 544.3 100.0 200.6 50.1

China 20 906.2 10,304.9 119.2 (1,402.2) 2,191.1

Colombia 1 1.9 33.2 17.7 22.6 5.3

Egypt 1 0.0 3.5 - 2.1

India 5 78.6 2,564.9 239.7 253.3 774.6

Indonesia 2 11.9 460.0 59.8 195.6 167.5

Israel 1 4.0 164.4 (12.3) 16.6 22.5

Malaysia 1 24.8 673.9 80.1 59.6 61.0

Mexico 3 127.8 1,562.1 (77.7) 440.2 302.0

Peru 1 4.6 221.2 25.0 103.1 96.3

Poland 2 1.6 95.9 11.1 90.0 7.3

Russia 2 84.1 1,905.6 (3.7) 488.8 378.8

South Africa 1 19.9 519.1 22.8 (15.9) 18.4

South Korea 2 147.1 3,343.0 (18.0) 263.2 770.6

Taiwan 2 142.0 2,916.6 (30.6) (494.2) 1,093.7

Thailand 1 10.7 331.2 58.1 61.2 174.8

Turkey 1 9.9 512.6 54.6 66.5 204.7

Vietnam 1 1.4 144.3 1.3 68.0 88.2

Fixed Income 115 1,958.8 133,216.0 4,580.6 25,148.1 44,801.9

Active 2 5.4 343.0 (315.5) 288.9 48.8

Aggregate 12 214.8 29,637.1 910.1 5,036.5 8,216.7

Convertible 1 4.2 301.6 29.9 71.0 212.0

Corporate 17 168.9 24,842.8 1,064.0 3,758.0 10,560.6

Government 42 1,254.7 34,686.9 1,390.7 9,449.9 6,706.9

High Yield 3 182.1 11,234.4 1,055.7 2,870.7 4,429.4

Inflation 6 68.4 22,305.6 135.6 1,823.7 10,139.8

Mortgage 3 13.3 2,106.9 73.4 226.1 913.1

Municipal 29 47.1 7,757.8 236.6 1,623.2 3,574.6

Commodities 99 2,895.9 88,181.2 (2,159.3) 6,900.0 32,551.8

Agriculture 17 37.2 2,652.2 (68.7) (412.5) 1,927.6

Broad 19 128.6 9,819.7 (139.9) 619.4 4,958.1

Energy 21 489.8 7,155.0 (258.5) (1,247.6) 6,055.9

Industrial Metals 17 23.3 872.6 (20.7) (323.7) 798.1

Livestock 1 0.7 74.2 (3.6) (25.5) 18.9

Precious Metals 24 2,216.3 67,607.5 (1,667.9) 8,289.9 18,793.2

Currency 35 421.7 5,695.8 (659.1) (2,337.8) 4,154.9

Alternative 6 596.3 2,127.2 481.0 1,172.2 1,258.7

Mixed 24 5.8 663.5 32.1 239.8 225.5 Total 1,017 66,163.2 834,913.7 9,566.3 49,974.0 119,469.1 Source: Global ETF Research and Implementation Strategy Team, BlackRock, National Stock Exchange (NSX), Bloomberg



Figure 35: US leveraged and inverse ETF and ETP net new assets by type of exposure, as at end July 2010 JULY-2010 #ETFs ADV ASSETS NNA EXPOSURE /ETPs (US$ MN) (US$ MN) (US$ MN) YTD 2010 NNA (US$ MN) 2009 NNA (US$ MN) Leveraged 76 4,112.3 11,307.9 (1,230.3) (702.4) (6,956.1)

Equity 59 4,000.0 9,950.7 (1,077.1) (782.8) (6,405.6)

Asia Pacific - Equity 2 0.2 12.0 0.0 3.0 8.7

Emerging Markets - Equity 9 66.4 502.5 (70.2) 47.5 316.2

Europe - Equity 1 0.3 2.9 (1.4) 2.8 -

Global (ex-US) - Equity 2 1.9 31.6 (0.5) (0.8) 23.9

North America - Equity 45 3,931.2 9,401.8 (1,005.0) (835.2) (6,754.3)

Commodities 8 106.0 1,241.8 (164.3) 44.1 (586.3)

Currency 3 1.3 26.9 (0.3) 12.3 10.7

Fixed Income 6 5.1 88.6 11.4 24.0 25.1

Inverse 25 16.7 728.9 (60.4) 119 3,284.3

Equity 15 394.1 3,941.2 758.1 1,517 2,766.2

Emerging Markets - Equity 2 6.8 267.5 15.0 63.8 273.3

Global (ex-US) - Equity 1 7.0 143.0 6.0 112.8 43.3

North America - Equity 12 380.3 3,530.7 737.1 1,340.4 2,449.6

Alternative 1 1.9 13.9 14.0 14.0 -

Commodities 6 3.2 72.1 (4.4) 4.8 165.9

Currency 2 8.2 212.9 (47.4) (134.2) 122.3

Fixed Income 1 5.3 443.9 (8.6) 248.7 229.9

Leveraged Inverse 76 5,468.6 16,569.0 897.0 4,344 16,649.9

Equity 59 5,051.8 10,590.8 1,103.8 2,434 13,636.1

Asia Pacific - Equity 2 0.3 19.6 3.4 (1.7) 18.6

Emerging Markets - Equity 9 128.5 688.9 (7.4) 198.2 645.8

Europe - Equity 1 11.1 80.9 (40.9) 109.8 9.4

Global - Equity 1 0.2 15.1 - 15.2 -

Global (ex-US) - Equity 2 4.9 57.2 2.9 34.7 13.5

North America - Equity 44 4,906.8 9,729.2 1,145.9 2,077.8 12,948.9

Commodities 9 79.2 399.0 23.8 (28.2) 337.3

Currency 2 45.4 492.6 (54.8) 315.8 170.2

Fixed Income 6 292.2 5,086.6 (175.9) 1,621.8 2,506.2 Total 177 9,597.7 28,605.8 (393.7) 3,760.4 12,978.1 Source: Global ETF Research and Implementation Strategy Team, BlackRock, National Stock Exchange (NSX), Bloomberg.

Figure 36: US exchanges average % market share per ETF exposure, as at end July 2010 TOTAL ADV TOTAL AVERAGE % MARKET SHARE AUM (# ‘000) ADV NASDAQ FINRA NYSE EXPOSURE # ETFs (US$ BN) Shares (US$ MN) BATS OMX BX CBOE Chicago NSX ISE -ADF NASDAQ Arca International - Equity 161 $95.9 75,758 $2,200.8 7.9% 0.4% 0.8% 0.0% 0.6% 0.4% 33.1% 12.4% 44.3%

Emerging Markets - Equity 82 $112.6 145,686 $5,822.2 8.6% 0.6% 0.6% 0.1% 0.6% 0.4% 33.3% 12.6% 43.2%

Large-Cap - Equity 39 $136.0 317,377 $28,763.8 19.4% 0.8% 1.5% 0.1% 1.1% 1.1% 25.7% 15.3% 35.1%

Sector - Equity 143 $74.5 231,716 $6,485.3 20.8% 1.0% 0.7% 0.1% 0.7% 0.5% 30.0% 14.8% 31.4%

Fixed Income 100 $127.4 20,990 $1,668.9 8.5% 1.2% 1.2% 0.0% 0.6% 0.5% 42.1% 9.3% 36.4%

Growth - Equity 27 $33.2 7,766 $424.1 20.6% 0.4% 1.1% 0.0% 1.1% 0.5% 34.6% 11.5% 30.2%

Value - Equity 27 $30.6 8,439 $424.9 21.7% 0.5% 0.9% 0.0% 1.1% 0.4% 34.6% 10.7% 30.0%

Broad Market - Equity 19 $26.6 3,890 $191.9 15.9% 0.4% 3.3% 0.1% 0.6% 0.3% 32.7% 8.3% 38.4%

Mid-Cap - Equity 12 $24.8 5,497 $626.7 26.7% 0.3% 5.1% 0.3% 0.8% 0.2% 27.6% 10.2% 28.7%

Small-Cap - Equity 18 $25.9 73,557 $4,579.5 16.1% 0.3% 2.9% 0.1% 0.9% 0.6% 35.0% 13.8% 30.3%

Custom 60 $13.9 3,332 $92.2 13.7% 0.1% 1.0% 0.0% 1.5% 0.8% 34.9% 10.5% 37.4%

Leveraged 60 $10.0 123,307 $3,986.9 16.2% 1.3% 0.0% 0.1% 1.0% 0.3% 25.4% 19.1% 36.7%

Inverse 15 $4.4 7,919 $398.5 18.5% 1.2% 0.1% 0.0% 1.0% 0.5% 33.1% 15.3% 30.3%

Leveraged Inverse 59 $15.4 206,423 $5,324.5 17.2% 2.0% 0.0% 0.1% 1.1% 0.6% 30.2% 19.1% 29.8%

Commodities 18 $8.5 9,844 $449.4 6.3% 0.4% 2.3% 0.1% 0.6% 0.8% 33.4% 19.0% 37.1%

Active 18 $0.5 242 $10.2 11.9% 0.0% 0.6% 0.0% 0.0% 0.1% 24.6% 5.8% 57.0%

Currency 8 $1.2 565 $13.8 3.2% 0.3% 8.0% 0.1% 0.2% 0.8% 35.7% 6.0% 45.8% Total 866 $741.3 1,242,309 $61,463.6 15.2% 0.9% 1.1% 0.1% 0.8% 0.5% 34.7% 13.4% 33.4% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



Figure 37: US exchanges total average daily turnover (US$ Mn) per ETF exposure, as at end July 2010 EXPOSURE BATS NASDAQ OMX BX CBOE Chicago NSX ISE FINRA-ADF NASDAQ NYSE Arca International - Equity $419.5 $60.9 $7.5 $9.7 $5.6 $6.6 $580.5 $360.2 $750.3

Emerging Markets - Equity $1,152.4 $212.2 $14.0 $40.1 $14.2 $15.0 $1,269.6 $1,279.3 $1,825.3

Large-Cap – Equity $5,900.6 $678.5 $83.3 $463.4 $144.1 $59.2 $6,539.2 $8,492.0 $6,397.4

Sector - Equity $1,497.8 $278.8 $9.3 $52.7 $24.4 $11.7 $1,340.5 $1,550.4 $1,719.8

Fixed Income $281.9 $78.9 $16.5 $0.6 $8.1 $5.9 $614.8 $225.6 $436.5

Growth - Equity $89.3 $6.9 $5.7 $0.2 $3.9 $1.4 $108.9 $94.5 $113.4

Value - Equity $96.7 $7.9 $0.9 $0.2 $3.0 $1.1 $105.2 $93.7 $116.3

Broad Market - Equity $24.5 $2.2 $0.4 $0.3 $1.7 $0.4 $85.2 $27.8 $49.4

Mid-Cap - Equity $110.6 $6.3 $4.0 $16.4 $3.9 $2.4 $116.1 $184.2 $182.9

Small-Cap - Equity $982.1 $80.8 $50.7 $65.4 $16.5 $10.9 $976.3 $1,285.5 $1,111.2

Custom $9.5 $0.7 $1.7 $0.0 $1.2 $0.6 $46.7 $7.0 $24.7

Leveraged $660.0 $98.4 $5.9 $13.7 $46.6 $9.7 $1,227.1 $985.2 $940.3

Inverse $85.7 $8.6 $0.6 $0.1 $3.6 $1.4 $141.6 $72.4 $84.4

Leveraged Inverse $866.7 $196.3 $7.5 $15.9 $45.0 $13.4 $1,770.3 $1,274.1 $1,135.2

Commodities $75.7 $11.4 $1.4 $2.7 $3.1 $1.3 $132.7 $109.1 $112.1

Active $1.3 $0.0 $0.0 $0.0 $0.0 $0.0 $4.1 $0.5 $4.3

Currency $1.2 $0.2 $1.0 $0.0 $0.1 $0.1 $4.8 $1.1 $5.3 Total $12,255.5 $1,728.9 $210.4 $681.4 $325.1 $141.2 $15,063.6 $16,042.5 $15,008.9 Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 38: US exchanges accumulated volume market share: 2010 EXCHANGE JAN-10 FEB-10 MAR-10 APR-10 MAY-10 JUN-10 JUL-10 AUG-10 SEP-10 OCT-10 NOV-10 DEC-10 BATS 17.3% 17.6% 17.6% 18.6% 18.4% 19.0% 19.9%

NASDAQ OMX BX 1.7% 1.9% 2.4% 3.1% 3.1% 2.8% 2.8%

CBOE 0.3% 0.3% 0.5% 0.5% 0.4% 0.4% 0.3%

Chicago 1.2% 1.5% 1.2% 1.1% 1.6% 1.2% 1.1%

NSX (Cincinnati) 0.2% 0.2% 0.3% 0.4% 0.4% 0.4% 0.5%

FINRA-ADF 28.2% 27.1% 29.1% 27.3% 25.9% 27.6% 24.5%

ISE 0.9% 0.8% 0.8% 0.7% 0.7% 0.5% 0.2%

NASDAQ 27.9% 27.6% 25.2% 25.3% 26.7% 24.7% 26.1%

NYSE 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

NYSE AMEX 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

NYSE Arca 22.3% 22.9% 22.9% 23.0% 22.8% 23.3% 24.4%

Philadelphia 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 39: US exchanges accumulated volume market share: 2009 EXCHANGE JAN-09 FEB-09 MAR-09 APR-09 MAY-09 JUN-09 JUL-09 AUG-09 SEP-09 OCT-09 NOV-09 DEC-09 BATS 15.5% 16.0% 16.4% 14.5% 14.2% 14.5% 14.9% 13.8% 14.3% 14.4% 15.0% 15.5%

NASDAQ OMX BX 0.1% 0.4% 0.9% 1.4% 1.3% 1.6% 1.9% 2.0% 2.4% 2.2% 2.2% 1.8%

CBOE 0.6% 0.4% 0.5% 0.6% 0.6% 0.6% 0.5% 0.5% 0.4% 0.3% 0.3% 0.6%

Chicago Stock Exchange 0.6% 0.5% 0.9% 0.8% 1.1% 1.6% 1.4% 1.5% 1.6% 1.6% 1.8% 1.4%

NSX (Cincinnati) 0.4% 0.5% 0.3% 0.5% 0.5% 0.5% 0.4% 0.5% 0.4% 0.4% 0.4% 0.3%

ISE 0.9% 1.0% 1.0% 1.4% 1.2% 1.2% 1.1% 1.2% 1.1% 0.9% 0.8% 0.9%

FINRA-ADF 22.7% 23.9% 23.9% 26.6% 28.3% 28.5% 29.3% 28.3% 27.8% 26.8% 27.5% 30.2%

NASDAQ 33.3% 32.4% 31.2% 28.9% 28.2% 27.1% 27.6% 29.1% 29.8% 31.3% 30.4% 27.1%

NYSE 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

NYSE AMEX 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

NYSE Arca 25.8% 24.9% 24.9% 25.3% 24.5% 24.5% 23.0% 23.2% 22.1% 22.1% 21.6% 22.2%

Philadelphia 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



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Figure 40: US listed ETF and HOLDRS short interest versus S&P 500 index levels (based on mid-month statistics) SHORT INTEREST % OF SHARES S&P 500 PERIOD # OF SHARES (MN) OUTSTANDING INDEX LEVEL 2003 Avg 812 27.1% 983

2004 Avg 952 26.3% 1,127

2005 Avg 781 17.2% 1,206

2006 Avg 837 13.5% 1,283

2007 Avg 1,242 16.1% 1,475

2008 Avg 1,693 17.0% 1,209

2009 Avg 1,653 12.4% 948

Jan-10 1,522 9.9% 1,138

Feb-10 1,746 11.3% 1,095

Mar-10 1,741 11.3% 1,151

Apr-10 1,663 10.8% 1,212

May-10 1,780 12.3% 1,136

Jun-10 1,868 11.9% 1,115

Jul-10 1,759 11.4% 1,096

2010 Avg 1,726 11.3% 1,135 Mid-month data captured from Bloomberg. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Based on data through July 2010 the average number of ETF shares short during 2010 YTD reached an all time high of 1,726 million shares, with an average of 1,693 million in 2008 and 1,653 million in 2009. The July 2010 short interest level for US-listed ETFs was 11.4% of shares outstanding or 1,759 million shares, up 1.4% from 1,735 million in December 2009.

Figure 41: Top 20 US listed ETFs based on short interest, as at end July 2010 SHORT SHARES SHORT BLOOMBERG INTEREST OUTSTANDING INTEREST ETF TICKER (000’ SHARES) (000’ SHARES) RATIO (%) SPDR S&P 500 SPY US 318,592 738,182 43.2%

iShares Russell 2000 Index Fund IWM US 218,031 200,700 108.6%

Financial Select Sector SPDR Fund XLF US 138,310 437,045 31.6%

PowerShares QQQ Trust QQQQ US 126,772 396,600 32.0%

SPDR S&P Retail ETF XRT US 81,260 15,600 520.9%

iShares Dow Jones U.S. Real Estate Index Fund IYR US 55,293 52,050 106.2%

iShares MSCI Emerging Markets Index Fund EEM US 49,268 878,400 5.6%

iShares MSCI EAFE Index Fund EFA US 46,638 653,400 7.1%

SPDR KBW Regional Banking ETF KRE US 44,248 31,453 140.7%

iShares FTSE/Xinhua China 25 Index Fund FXI US 37,570 197,400 19.0%

Consumer Discretionary Select Sector SPDR Fund XLY US 32,242 55,153 58.5%

Energy Select Sector SPDR Fund XLE US 31,486 105,874 29.7%

Technology Select Sector SPDR Fund XLK US 25,825 178,906 14.4%

Industrial Select Sector SPDR Fund XLI US 25,674 116,326 22.1%

Health Care Select Sector SPDR Fund XLV US 23,539 81,165 29.0%

iShares MSCI Japan Index Fund EWJ US 22,560 502,800 4.5%

Materials Select Sector SPDR Trust XLB US 17,942 52,874 33.9%

iShares MSCI Brazil Index Fund EWZ US 16,930 143,650 11.8%

SPDR S&P Oil & Gas Exploration & Production ETF XOP US 15,987 12,150 131.6%

SPDR S&P Homebuilders ETF XHB US 15,577 43,500 35.8% Mid-month data captured from Bloomberg. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 42: US listed ETF and HOLDRS short interest versus S&P 500 index levels, as at end July 2010

Mid-month data captured from Bloomberg. With short sales, the investor risks paying more for a security than the investor received from the sale. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



ETFs IN EUROPE We celebrate the 10th anniversary of ETFs in Europe as the first ETFs to launch in Europe were the iShares DJ STOXX 50 (EUN1 GY) and iShares DJ Euro STOXX 50 (EUN2 GY) on 11 April 2000 on the Deutsche Boerse, followed by the iShares FTSE 100 (ISF LN) on the London Stock Exchange extraMARK segment on 28 April 2000. The first two ETFs were originally branded as ‘LDRS’, sponsored by Merrill Lynch International and later acquired by iShares in September 2003. In Europe there were 969 ETFs, assets of US$236.3 Bn, with 3,117 listings from 35 providers on 18 exchanges at the end of July 2010. European ETF AUM has increased by 4.2%, while the MSCI Europe Index is down 8.7% YTD in US dollar terms. In Europe net sales of mutual funds (excluding ETFs) were US$55.2 Bn while net sales of ETFs domiciled in Europe were US$21.2 Bn during the first six months of 2010 according to Lipper FMI.

ETFs providing exposure to fixed income are the most popular with 23.3% of assets followed by ETFs covering European country indices with 15.0% of the assets in Europe. YTD 150 new ETFs were launched in Europe with a further 80 planned, while eight ETFs were delisted. iShares is the largest provider of ETFs in Europe in terms of both number of products, 173, and AUM of US$85.4 Bn, reflecting 36.1% market share; Lyxor Asset Management is second with 125 products and US$45.1 Bn, a 19.1% market share. db x-trackers is third with 135 products and assets of US$38.4 Bn and a 16.3% market share. Additionally, there were 380 Exchange Traded Products (ETPs), assets of US$18.8 Bn, with 879 listings from nine providers on six exchanges. YTD ETP assets in Europe increased by 19.6% to US$18.8 Bn.

Figure 43: ETF listings in Europe, as at end July 2010

Austria Germany Italy Spain United Kingdom P Listings: 1 P Listings: 371 P Listings: 13 P Listings: 10 P Listings: 176 T Listings: 21 T Listings: 1,059 T Listings: 442 T Listings: 44 T Listings: 476 Providers: 1 Providers: 9 Providers: 4 Providers: 2 Providers: 9 AUM: US$0.0 Bn AUM: US$93.2 Bn AUM: US$1.8 Bn AUM: US$1.4 Bn AUM: US$54.2 Bn

Belgium Greece Netherlands Sweden P Listings: 1 P Listings: 2 P Listings: 11 P Listings: 16 T Listings: 1 T Listings: 2 T Listings: 106 T Listings: 46 Providers: 1 Providers: 2 Providers: 4 Providers: 2 AUM: US$0.0 Bn AUM: US$0.1 Bn AUM: US$0.3 Bn AUM: US$2.1 Bn

Finland Hungary Norway Switzerland P Listings: 1 P Listings: 1 P Listings: 6 P Listings: 85 T Listings: 1 T Listings: 1 T Listings: 6 T Listings: 461 Providers: 1 Providers: 1 Providers: 2 Providers: 6 AUM: US$0.2 Bn AUM: US$0.0 Bn AUM: US$0.7 Bn AUM: US$28.3 Bn

France Ireland Slovenia Turkey P Listings: 250 P Listings: 14 P Listings: 1 P Listings: 10 T Listings: 426 T Listings: 14 T Listings: 1 T Listings: 10 Providers: 9 Providers: 2 Providers: 1 Providers: 4 AUM: US$53.5 Bn AUM: US$0.3 Bn AUM: US$0.0 Bn AUM: US$0.1 Bn P Listings = # Primary listings T Listings = # Total listings Providers = # Primary ETF Providers AUM = Assets Under Management in primary listings only Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

2

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8 12 16



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Figure 44: European listed ETF and ETP asset growth ASSETS (US$ Bn) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 JUL-10 ETF Assets Total $0.7 $5.7 $10.7 $20.4 $34.0 $54.9 $89.7 $128.5 $142.7 $226.9 $236.3

ETF Equity Assets $0.7 $5.7 $10.7 $19.4 $31.0 $49.3 $75.7 $103.5 $96.6 $159.8 $159.7

ETF Fixed Income Assets $1.0 $2.9 $5.2 $12.1 $21.0 $41.1 $51.6 $55.6

ETF Commodity Assets $0.4 $2.0 $3.3 $4.9 $15.2 $18.9 ETP Assets $1.1 $2.1 $4.9 $7.0 $15.7 $18.8 ETF/ETP Assets Total $0.7 $5.7 $10.7 $20.4 $34.0 $56.0 $91.8 $133.3 $149.7 $242.6 $255.1 # ETFs 6 71 118 104 114 165 273 423 636 827 969 # ETPs 2 32 56 123 178 380 # ETFs/ETPs Total 6 71 118 104 114 167 305 479 759 1,005 1,349 Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Assets US$ Bn # Products# Products



iShares, 27.5%

Lyxor AM, 27.2%

db x-trackers, 17.2%

Source Markets, 11%

XACT Fonder, 4.3%

Others, 12.9%

Figure 45: ETF providers in Europe ranked by AUM, as at end July 2010

JUL-10 YTD CHANGE AUM # JUL NNA YTD NNA AUM % % MARKETPROVIDER # ETFs # LISTINGS (US$ BN) % TOTAL PLANNED (US$ BN) (US$ BN) # ETFs % ETFs (US$ BN) AUM SHARE iShares 173 745 $85.4 36.1% 3 $1.2 $5.5 5 3.0% -$0.3 -0.4% -1.6%

Lyxor Asset Management 125 471 $45.1 19.1% 0 $0.0 $3.3 2 1.6% -$0.5 -1.0% -1.0%

db x-trackers 135 522 $38.4 16.3% 5 $0.0 $2.1 19 16.4% $1.2 3.2% -0.1%

Credit Suisse Asset Management 41 105 $11.6 4.9% 11 $0.3 $2.3 14 51.9% $1.9 20.1% 0.7%

Zurich Cantonal Bank 7 12 $8.7 3.7% 0 $0.2 $1.5 3 75.0% $2.0 29.8% 0.7%

Commerzbank 79 316 $6.9 2.9% 2 $0.1 $1.2 17 27.4% $0.7 10.8% 0.2%

Amundi Investment Solutions 87 216 $6.3 2.7% 0 $0.1 $2.0 24 38.1% $1.5 31.4% 0.6%

Source Markets 50 52 $6.0 2.5% 18 $0.1 $3.2 18 56.3% $3.2 111.5% 1.3%

ETFlab Investment 35 54 $5.5 2.3% 0 $0.2 -$0.4 4 12.9% -$1.6 -22.8% -0.8%

EasyETF 64 121 $5.4 2.3% 2 $0.0 -$0.1 0 0.0% -$0.5 -7.8% -0.3%

UBS Global Asset Management 20 99 $5.0 2.1% 1 $0.1 $1.9 6 42.9% $1.4 41.0% 0.5%

Julius Baer 16 32 $3.3 1.4% 0 $0.1 $1.1 12 300.0% $1.2 56.7% 0.5%

XACT Fonder 12 16 $2.6 1.1% 0 -$0.1 $0.1 0 0.0% -$0.1 -2.2% -0.1%

BBVA Asset Management 8 8 $1.3 0.5% 0 $0.0 $0.0 0 0.0% -$1.1 -45.3% -0.5%

State Street Global Advisors 13 36 $1.1 0.4% 0 $0.0 -$0.3 0 0.0% -$0.4 -26.5% -0.2%

PowerShares 19 66 $1.0 0.4% 1 $0.0 $0.0 0 0.0% $0.0 2.2% 0.0%

RBS 10 55 $0.9 0.4% 21 $0.0 $0.1 0 0.0% $0.1 11.9% 0.0%

ETF Securities 25 107 $0.5 0.2% 0 $0.1 $0.2 4 19.0% $0.2 52.2% 0.1%

Marshall Wace Asset Management 3 4 $0.4 0.2% 0 $0.0 $0.4 3 100.0% $0.4 100.0% 0.2%

HSBC 9 13 $0.3 0.1% 11 $0.0 $0.2 6 200.0% $0.2 277.3% 0.1%

DnB NOR Asset Management 3 3 $0.3 0.1% 0 $0.0 $0.0 0 0.0% -$0.1 -20.2% 0.0%

Seligson & Co Fund Management 1 1 $0.2 0.1% 0 $0.0 $0.0 0 0.0% -$0.1 -19.5% 0.0%

JPM Structured Fund Management 6 12 $0.1 0.1% 0 $0.0 $0.0 0 0.0% -$0.1 -30.4% 0.0%

Finans Portfoy Yonetimi 6 6 $0.1 0.1% 0 $0.0 $0.0 0 0.0% $0.0 -20.6% 0.0%

Alpha Asset Management 1 1 $0.1 0.0% 0 $0.0 $0.0 0 0.0% $0.0 -30.7% 0.0%

HQ Fonder 7 7 $0.0 0.0% 0 $0.0 $0.0 4 133.3% $0.0 0.0% 0.0%

NCB Investment Services 1 1 $0.0 0.0% 0 $0.0 $0.0 0 0.0% $0.0 -23.8% 0.0%

OTP Fund Management 1 1 $0.0 0.0% 0 $0.0 $0.0 0 0.0% $0.0 -10.7% 0.0%

Osmosis Investment Management 1 2 $0.0 0.0% 0 $0.0 $0.0 1 100.0% $0.0 0.0% 0.0%

NBG Asset Management 1 1 $0.0 0.0% 1 $0.0 $0.0 0 0.0% $0.0 0.0% 0.0%

Is Investment 2 2 $0.0 0.0% 0 $0.0 -$0.1 0 0.0% $0.0 -20.3% 0.0%

Medvesek Pusnik AM 1 1 $0.0 0.0% 0 $0.0 $0.0 0 0.0% $0.0 -3.7% 0.0%

Bizim Menkul Degerler 1 1 $0.0 0.0% 0 $0.0 $0.0 0 0.0% $0.0 -9.4% 0.0%

Ak Securities 1 1 $0.0 0.0% 0 $0.0 $0.0 0 0.0% $0.0 0.5% 0.0%

Think Capital 5 5 $0.0 0.0% 0 $0.0 $0.0 0 0.0% $0.0 0.0% 0.0%

Direxion Shares - 12 - - 0 - - - - - - -

ProShares - 8 - - 0 - - - - - - -

Van Eck Associates Corp - 1 - - 0 - - - - - - -

Vanguard - 1 - - 0 - - - - - - -

Garanti Bank - - - - 1 - - - - - - -

Hinduja Bank (Switzerland) - - - - 1 - - - - - - -

Kuveyt Turk Participation Bank - - - - 1 - - - - - - -

Qbasis Invest - - - - 1 - - - - - - - Total 969 3,117 $236.3 100.0% 80 $2.4 $24.2 142 17.2% $9.4 4.2% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 46: Top five European ETF providers by average daily US dollar turnover, as at end July 2010 AVERAGE DAILY TURNOVER (US$ MN) % MARKET % MARKET CHANGE % PROVIDER DEC-09 SHARE JUL-10 SHARE (US$ MN) CHANGE iShares $852.3 31.7% $823.3 27.5% -$29.0 -3.4%

Lyxor AM $623.4 23.2% $815.0 27.2% $191.6 30.7%

db x-trackers $598.9 22.3% $515.9 17.2% -$83.0 -13.9%

Source Markets $106.4 4.0% $330.8 11.0% $224.3 210.8%

XACT Fonder $133.4 5.0% $128.7 4.3% -$4.8 -3.6%

Others $372.4 13.9% $385.6 12.9% $13.2 3.5% Total $2,686.9 100.0% $2,999.3 100.0% $312.4 11.6% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



Fixed Income, 23.3%Country Exposure Europe - Equity, 15%

Regional Exposure Eurozone - Equity, 12.5%Emerging Markets - Equity, 11.5%

Commodities, 8%Country Exposure United States - Equity, 5.7%

International - Equity, 5.6%Regional Exposure Europe - Equity, 4.4%European Sector Exposure - Equity, 3.8%

Global Exposure - Equity, 3.7%Style - Equity, 2.2%

Inverse, 1.4%Alternative, 0.7%Eurozone Sector Exposure - Equity, 0.7%

Leveraged, 0.6%Leveraged Inverse, 0.5%

Currency, 0.2%US Sector Exposure - Equity, 0.1%

Mixed (Equity & Fixed Income), 0%

Figure 47: ETP providers in Europe ranked by assets, as at end July 2010 JUL-10 YTD CHANGE ASSETS # JUL NNA YTD NNA ASSETS % % MARKET PROVIDER # ETPs (US$ BN) % TOTAL PLANNED (US$ BN) (US$ BN) # ETPs % ETPs (US$ BN) ASSETS SHARE ETF Securities 187 $17.3 92.3% 14 -$0.1 $1.8 40 27.2% $2.1 14.2% -4.4%

Source Markets 28 $0.8 4.2% 0 $0.0 $0.4 0 0.0% $0.4 89.1% 1.5%

UBS Global Asset Management 69 $0.2 1.0% 0 $0.0 $0.2 69 100.0% $0.2 100.0% 1.0%

RBS 15 $0.1 0.8% 0 $0.0 $0.1 15 100.0% $0.1 100.0% 0.8%

Deutsche Bank 23 $0.1 0.7% 2 $0.0 $0.1 23 100.0% $0.1 100.0% 0.7%

Lyxor 4 $0.1 0.5% 0 $0.0 $0.0 1 33.3% $0.0 0.0% -0.1%

Barclays (iPath) 12 $0.1 0.3% 0 $0.0 $0.0 12 100.0% $0.1 100.0% 0.3%

Standard Commodities 1 $0.0 0.2% 0 $0.0 $0.0 1 100.0% $0.0 100.0% 0.2%

Societe Generale 41 $0.0 0.0% 0 $0.0 $0.0 41 100.0% $0.0 0.0% 0.0%

GAM Holding - - - 4 - - - - - - - Total 380 $18.8 100.0% 20 -$0.1 $2.7 202 113.5% $3.1 19.6% 2.9% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 48: European ETF assets by type of exposure, as at end July 2010 JUL-10 YTD CHANGE AUM AUM % % MARKET EXPOSURE # ETFs (US$ BN) % TOTAL # ETFs % ETFs (US$ BN) AUM SHARE Equity - Total 654 $154.2 65.2% 77 13.3% -$0.2 -0.1% -2.8%

Country Exposure Europe - Equity 104 $35.5 15.0% 14 15.6% -$1.3 -3.5% -1.2%

Regional Exposure Eurozone - Equity 37 $29.6 12.5% 4 12.1% -$5.5 -15.6% -2.9%


Country Exposure United States - Equity 49 $13.5 5.7% 12 32.4% $1.5 12.5% 0.4%

International - Equity 67 $13.2 5.6% 12 21.8% $2.2 19.9% 0.7%

Regional Exposure Europe - Equity 50 $10.4 4.4% 3 6.4% -$1.6 -13.2% -0.9%

European Sector Exposure - Equity 133 $8.9 3.8% 7 5.6% -$1.3 -12.6% -0.7%

Global Exposure - Equity 46 $8.8 3.7% 0 0.0% $0.7 8.5% 0.2%

Style - Equity 43 $5.1 2.2% 3 7.5% $0.4 9.2% 0.1%

Eurozone Sector Exposure - Equity 19 $1.7 0.7% 1 5.6% -$0.3 -14.6% -0.2%

US Sector Exposure - Equity 12 $0.2 0.1% 11 1100.0% $0.1 417.3% 0.1%

Fixed Income 169 $55.1 23.3% 20 13.4% $3.7 7.2% 0.7%

Commodities 61 $18.9 8.0% 26 74.3% $3.7 24.6% 1.3%

Inverse 40 $3.2 1.4% 10 33.3% $0.5 16.8% 0.1%

Alternative 7 $1.8 0.7% 4 133.3% $1.6 1320.1% 0.7%

Leveraged 16 $1.5 0.6% 2 14.3% -$0.1 -5.0% -0.1%

Leveraged Inverse 14 $1.3 0.5% 5 55.6% $0.2 13.6% 0.0%

Currency 4 $0.4 0.2% -2 -33.3% $0.0 2.0% 0.0%

Mixed (Equity & Fixed Income) 4 $0.1 0.0% 0 0.0% $0.0 20.7% 0.0% Total 969 $236.3 100.0% 142 17.2% $9.4 4.2%




MSCI, 21.6%

STOXX, 18.6%

Deutsche Boerse, 8.7%

Markit, 8.1%

FTSE, 7.2%

EuroMTS, 4.7%

S&P, 4.3%

SIX Swiss Exchange, 3.2%

Barclays Capital, 3.1%

CAC, 2.7%

NASDAQ OMX, 1.6%

Dow Jones, 1.5%

Hang Seng, 0.6%

Topix, 0.3%

Nikkei, 0.2%

Russell, 0.1%

S-Network, 0%

NYSE Euronext, 0%

Intellidex, 0%

Other, 13.4%

Figure 49: European ETF assets by index provider, as at end July 2010 JUL-10 YTD CHANGE AUM AUM % % MARKET INDEX PROVIDER # ETFs (US$ BN) % TOTAL # ETFs % ETFs (US$ BN) AUM SHARE MSCI 189 $51.0 21.6% 27 16.7% $7.4 16.9% 2.4%

STOXX 210 $43.9 18.6% 10 5.0% -$6.7 -13.3% -3.7%

Deutsche Boerse 37 $20.5 8.7% 10 37.0% $0.7 3.3% -0.1%

Markit 83 $19.1 8.1% 18 27.7% $0.6 3.1% -0.1%

FTSE 81 $17.1 7.2% 18 28.6% $1.2 7.7% 0.2%

EuroMTS 29 $11.1 4.7% 7 31.8% $0.1 1.0% -0.1%

S&P 53 $10.2 4.3% 20 60.6% -$0.5 -4.8% -0.4%

SIX Swiss Exchange 15 $7.5 3.2% 2 15.4% $0.1 1.7% -0.1%

Barclays Capital 18 $7.2 3.1% 0 0.0% $1.0 15.7% 0.3%

CAC 15 $6.5 2.7% -3 -16.7% -$1.0 -13.9% -0.6%

NASDAQ OMX 24 $3.8 1.6% 6 33.3% $0.1 3.7% 0.0%

Dow Jones 35 $3.6 1.5% 2 6.1% $0.5 14.5% 0.1%

Hang Seng 6 $1.5 0.6% 2 50.0% $0.0 1.5% 0.0%

Topix 4 $0.8 0.3% 0 0.0% $0.1 21.2% 0.0%

Nikkei 3 $0.5 0.2% 1 50.0% $0.0 5.8% 0.0%

Russell 4 $0.2 0.1% -4 -50.0% $0.0 -13.5% 0.0%

S-Network 3 $0.1 0.0% 0 0.0% $0.0 23.6% 0.0%

NYSE Euronext 6 $0.1 0.0% 4 200.0% $0.1 100.0% 0.0%

Intellidex 1 $0.0 0.0% -4 -80.0% $0.0 -33.4% 0.0%




Figure 50: STOXX 600 Sector ETF Net Flows, for the week ending 30 July 2010 AUM in sector ETFs is more than double the US$3.6 Bn open interest in sector futures. The week ending 30 July 2010 saw US$284.6 Mn net inflows to STOXX 600 sector ETFs. The largest sector ETF inflows in the week ending 30 July 2010 were in Banks with US$150.9 Mn and Telecommunications with US$98.2 Mn while Industrial Goods & Services experienced net outflows of US$44.2 Mn.

Year-to-date, STOXX Europe 600 sector ETFs have seen US$150.2 Mn net outflows. Year-to-date, Basic Resources sector ETFs have seen the largest net outflows with US$144.7 Mn, followed by Telecommunications with US$114.0 Mn while Media has experienced the largest net inflows with US$240.1 Mn net new assets YTD.

Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. Index YTD returns reflect US dollar total return performance from 30/12/2009 to 30/07/2010. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

# STOCKS % WEIGHT WEEKLY RANK YTD RANK 30-JulYTD %

CHANGE

Automobiles & Parts SXAR 14 2.1% -0.3% 13 0.7% 5 71.8 267.1 19.8% 2.6 17.4 79.9 32.3

Banks SX7R 54 15.2% 6.6% 1 -7.2% 13 738.5 1,317.5 -13.3% 33.6 150.9 124.9 -65.2

Basic Resources SXPR 30 5.4% 0.2% 10 -8.3% 14 323.1 1,075.1 -20.9% 15.1 2.9 119.5 -144.7

Chemicals SX4R 21 4.0% -0.3% 12 -8.5% 15 81.6 201.2 -10.5% 5.5 -7.5 9.8 -2.3

Construction & Materials SXOR 26 2.7% 0.6% 9 -15.6% 17 26.4 139.6 -26.6% 0.3 -12.5 -7.1 -17.1

Financial Services SXFR 31 1.4% 3.3% 3 -5.3% 11 17.2 71.8 -9.6% 0.3 0.0 2.9 -2.5

Food & Beverage SX3R 27 7.7% -3.0% 19 0.1% 6 181.1 495.5 -5.1% 2.6 61.8 108.2 -20.6

Health Care SXDR 34 9.6% -0.1% 11 -9.1% 16 387.5 778.6 -19.2% 6.7 20.0 38.9 -100.6

Industrial Goods & Services SXNR 93 9.2% -0.7% 15 5.0% 1 367.5 576.1 46.6% 5.3 -44.2 34.5 147.2

Insurance SXIR 33 5.4% 4.3% 2 -6.4% 12 155.0 583.7 -10.9% 4.2 23.9 22.1 -24.5

Media SXMR 28 2.2% 2.2% 6 0.9% 4 108.7 363.0 221.2% 2.8 7.3 -41.7 240.1

Oil & Gas SXER 38 8.9% 0.7% 8 -17.3% 19 168.9 804.7 -23.0% 4.6 -1.1 -54.0 -31.5

Personal & Household Goods SXQR 29 5.2% -1.4% 18 4.1% 2 159.3 232.5 40.8% 4.3 1.5 23.1 60.6

Real Estate SX86R 19 1.0% 2.1% 7 -4.5% 9 15.9 60.7 -25.4% 0.7 0.0 -2.1 -14.7

Retail SXRR 24 3.5% -0.5% 14 -0.8% 7 84.9 127.5 -28.7% 1.6 0.9 -6.4 -49.0

Technology SX8R 26 3.2% -0.9% 16 -3.0% 8 83.4 199.5 2.8% 1.7 -10.2 -12.1 15.0

Telecommunications SXKR 20 6.1% 3.0% 4 -5.2% 10 237.3 702.7 -19.9% 5.2 98.2 82.0 -114.0

Travel & Leisure SXTR 22 1.3% -1.0% 17 4.0% 3 69.8 71.6 -18.9% 2.0 1.5 -9.6 -17.6

Utilities SX6R 31 5.7% 2.6% 5 -16.3% 18 276.7 538.6 -24.8% 3.3 -26.3 -6.8 -41.3

Total 600 100.0% 1.3% -5.7% 3,554.7 8,607.1 -10.2% 102.5 284.6 506.2 -150.2

SECTOR TICKER

STOXX 600ETF

5-DAY ADV

(US$ Mn)YTD ETF NET FLOWS (US$ Mn)

US$ TOTAL RETURN PERFORMANCEWEEKLY ETF NET FLOWS(US$ Mn)

MTD ETF NET FLOWS (US$ Mn)

ETF AUM (US$ Mn)FUTURES

OPENINTEREST (US$ Mn)



Figure 51: European ETF and ETP net new assets by type of exposure, as at end July 2010 JULY-2010 #ETFs ADV ASSETS NNA EXPOSURE /ETPs (US$ MN) (US$ MN) (US$ MN) YTD 2010 NNA (US$ MN) 2009 NNA (US$ MN) Equity 725 2,571.3 160,107.2 1,316.9 13,442.5 32,725.0

Europe - Equity 439 1,903.3 95,654.1 365.6 1,849.9 18,205.5

Broad 271 1,516.8 84,299.1 (209.8) 2,046.4 14,818.5

Consumer Goods/Services 39 37.9 1,649.0 165.8 279.9 335.4

Energy 10 8.3 872.4 (54.0) (58.4) 322.1

Financials 26 108.9 2,638.6 217.9 (135.1) 825.5

Healthcare 11 9.9 889.7 38.9 (114.2) 145.9

Industrials 11 65.1 640.1 36.2 149.5 136.6

Information Technology 12 4.7 344.5 (11.3) (16.3) 12.4

Materials 19 113.4 1,387.8 132.8 (144.0) 522.5

Private Equity 1 0.4 90.8 (7.6) 40.8 34.2

Real Estate 12 5.4 1,440.3 (7.5) 26.8 333.6

Telecommunications 11 19.9 729.3 80.8 (157.5) 425.0

Utilities 11 11.9 567.4 (5.8) (119.0) 361.3

Other 5 0.7 105.0 (10.8) 50.9 (67.4)

North America - Equity 79 166.1 16,630.0 88.4 2,884.1 1,561.5

Asia Pacific - Equity 52 104.5 9,985.7 (224.5) 1,701.6 2,662.0

Global - Equity 56 103.3 10,522.9 442.2 1,886.9 2,799.6

Emerging Markets - Equity 99 294.1 27,314.5 645.2 5,120.1 7,496.4

Broad - EM 18 99.1 13,006.0 305.1 3,516.7 3,665.0

Regional - EM 20 28.5 2,866.0 128.6 236.1 778.8

Country - EM 61 166.5 11,442.5 211.5 1,367.2 3,052.7

Brazil 8 33.2 2,343.8 13.1 89.8 811.2

China 10 42.9 2,733.4 59.5 (33.7) 862.9

Egypt 1 0.1 11.6 - 3.6 (5.2)

Hungary 1 0.3 16.6 0.1 (0.5) (0.3)

India 5 24.7 2,442.9 20.2 312.4 616.3

Kuwait 2 0.1 48.5 - 15.6 14.5

Malaysia 1 1.2 76.5 - 46.9 10.1

Mexico 1 0.0 4.4 1.7 1.7 -

Russia 6 13.8 1,442.0 (5.0) 475.2 174.2

South Africa 5 3.5 245.2 4.5 54.8 64.3

South Korea 4 9.5 824.5 39.1 353.7 152.3

Taiwan 4 6.1 462.4 3.6 53.4 137.7

Thailand 0 - - - - 30.5

Turkey 11 29.8 592.0 68.0 (48.1) 113.3

UAE 1 0.1 13.2 - 1.2 7.2

Vietnam 1 1.3 185.4 6.6 41.2 63.6

Fixed Income 182 334.0 55,550.9 989.1 6,828.3 9,453.3

Broad 1 1.4 260.1 20.4 157.1 102.3

Corporate 13 66.2 10,072.1 521.2 1,644.7 4,770.8

Covered 8 2.4 900.9 17.5 256.6 438.4

Credit Spreads 13 7.0 778.9 82.9 (71.9) (291.1)

Government 117 176.6 31,493.4 863.5 6,167.5 6,193.2

Inflation 15 23.2 4,026.5 (546.0) (218.7) 2,365.8

Money Market 14 53.9 6,281.7 29.6 (1,203.2) (4,518.2)

Mortgage 1 3.5 1,737.4 - 96.3 392.1

Commodities 371 283.0 37,414.5 (14.0) 5,808.3 13,657.9

Broad 57 27.0 5,302.9 10.9 641.4 2,985.9

Agriculture 83 25.3 2,285.9 47.9 180.6 1,294.3

Energy 74 31.5 2,769.3 118.4 401.7 1,834.2

Industrial Metals 55 10.7 740.5 35.2 233.6 343.5

Livestock 17 0.5 74.8 4.1 0.5 29.4

Precious Metals 85 188.2 26,241.1 (230.6) 4,350.4 7,170.7

Currency 62 6.8 513.2 51.9 263.8 190.7

Alternative 8 9.9 1,417.1 (5.8) 485.8 898.6

Mixed (Equity & Fixed Income) 1 0.4 85.9 4.3 18.6 14.8 Total 1,349 3,205.4 255,088.7 2,342.5 26,847.4 56,940.3 Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



Figure 52: European Leveraged and Inverse ETF and ETP net new assets by type of exposure, as at end July 2010 JULY-2010 #ETFs ADV ASSETS NNA EXPOSURE /ETPs (US$ MN) (US$ MN) (US$ MN) YTD 2010 NNA (US$ MN) 2009 NNA (US$ MN) Leveraged 60 216.7 2,865.8 49.1 382.0 1,229.8

Equity 27 207.5 2,161.3 33.0 188.9 765.4

Europe - Equity 24 204.3 2,105.4 24.3 169.2 751.6

North America - Equity 3 3.2 55.9 8.6 19.7 13.7

Commodities 33 9.2 704.5 16.1 193.1 464.5

Inverse 112 175.6 5,454.8 163.1 1,448.9 2,763.1

Equity 30 158.0 2,858.8 110.3 531.8 1,713.6

Asia Pacific - Equity 1 0.4 18.7 1.9 13.6 8.6

Europe - Equity 27 143.4 2,583.2 83.6 440.8 1,537.4

North America - Equity 2 14.3 256.8 24.8 77.4 167.6

Commodities 35 8.5 284.9 0.1 77.3 197.7

Currency 29 4.5 122.3 16.3 104.1 22.5

Fixed Income 17 4.6 2,180.5 42.9 754.6 801.4

Alternative 1 - 8.3 (6.5) (18.8) 27.9

Leveraged Inverse 22 222.2 1,433.4 121.4 363.8 958.1

Equity 21 216.8 1,375.0 121.4 303.9 958.1

Europe - Equity 20 216.0 1,364.3 120.1 294.1 958.1

North America - Equity 1 0.8 10.8 1.3 9.9 -

Fixed Income 1 5.4 58.4 - 59.9 - Total 1,349 3,205.4 255,088.7 2,342.5 26,847.4 56,940.3 Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



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According to European Fund and Asset Management Association (EFAMA), UCITS posted net inflows of €49 Bn in the first quarter of 2010, with a rebound in investor confidence providing sustained demand for bond, equity and balanced funds, while money market funds experienced net outflows (€38 Bn) for the fourth consecutive quarter. The combined assets of both UCITS and non-UCITS increased 5.8% in the first quarter to reach €7,445 Bn at the end of March 2010. Figure 53: Net assets of European investment funds ASSETS (€ Bn) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1-10 Total Assets 4,156 4,561 4,619 4,296 4,835 5,373 6,569 7,574 7,924 6,123 7,039 7,445

UCITS Assets 3,195 3,550 3,619 3,346 3,785 4,212 5,172 5,974 6,201 4,575 5,299 5,610

Non-UCITS Assets 961 1,011 1,000 950 1,050 1,161 1,397 1,600 1,723 1,548 1,740 1,834

Total # Funds 43,212 44,342 47,341 51,166 53,806 52,064 52,401

# UCITS Funds 30,167 30,837 33,600 36,079 37,643 35,946 36,122

# Non-UCITS Funds 9,345 13,505 13,741 15,087 16,163 16,118 16,279 Source: European Fund and Asset Management Association (EFAMA, formerly FEFSI). 2008 2009 YTD CHANGE

COUNTRY # FUNDS € MN US$ MN % SHARE # FUNDS € MN US$ MN % SHARE # FUNDS € MN % SHARE Austria 2,307 127,729 177,761 2.1% 2,181 136,603 199,672 1.9% -126 8,874 -0.1%

Belgium 1,924 92,822 129,181 1.5% 1,992 92,523 133,289 1.3% 68 -299 -0.2%

Bulgaria 82 164 229 0.0% 86 180 259 0.0% 4 16 0.0%

Czech Republic 107 4,495 6,255 0.1% 109 4,426 6,376 0.1% 2 -69 0.0%

Denmark 789 97,788 136,092 1.6% 835 109,608 157,901 1.6% 46 11,820 0.0%

Finland 522 41,338 57,530 0.7% 511 54,251 78,513 0.8% -11 12,913 0.1%

France 12,232 1,293,265 1,799,837 21.1% 11,708 1,426,395 2,054,865 20.3% -524 133,130 -0.9%

Germany 6,052 911,330 1,268,298 14.9% 5,957 1,017,356 1,465,603 14.5% -95 106,026 -0.4%

Greece 279 10,324 14,368 0.2% 245 10,338 14,893 0.1% -34 14 0.0%

Hungary 412 9,473 13,184 0.2% 413 11,088 15,974 0.2% 1 1,615 0.0%

Ireland 5,025 647,054 900,505 10.6% 4,627 748,629 1,078,475 10.6% -398 101,575 0.1%

Italy 1,132 246,981 343,723 4.0% 1,049 249,952 360,081 3.6% -83 2,971 -0.5%

Liechtenstein 508 15,246 21,218 0.2% 561 22,375 32,234 0.3% 53 7,129 0.1%

Luxembourg 12,325 1,559,653 2,170,569 25.5% 12,232 1,840,993 2,652,135 26.2% -93 281,340 0.7%

Netherlands 522 67,504 93,945 1.1% 522 79,000 113,807 1.1% 0 11,496 0.0%

Norway 530 29,573 41,157 0.5% 487 49,403 71,170 0.7% -43 19,830 0.2%

Poland 436 17,446 24,279 0.3% 493 22,349 32,196 0.3% 57 4,903 0.0%

Portugal 523 25,054 34,868 0.4% 538 28,477 41,024 0.4% 15 3,423 0.0%

Romania 68 1,701 2,367 0.0% 69 2,586 3,726 0.0% 1 885 0.0%

Slovakia 124 3,278 4,562 0.1% 75 3,418 4,924 0.0% -49 140 0.0%

Slovenia 132 1,872 2,605 0.0% 132 2,195 3,163 0.0% 0 323 0.0%

Spain 3,014 203,498 283,209 3.3% 2,650 194,520 280,225 2.8% -364 -8,978 -0.6%

Sweden 565 86,624 120,555 1.4% 571 126,402 182,094 1.8% 6 39,778 0.4%

Switzerland 777 157,040 218,553 2.6% 717 157,247 228,631 2.2% -60 207 -0.3%

Turkey 357 13,293 18,500 0.2% 338 15,912 22,923 0.2% -19 2,619 0.0%

United Kingdom 3,062 458,116 637,560 7.5% 2,966 631,000 909,019 9.0% -96 172,884 1.5% All Funds 53,806 6,122,663 8,520,910 100.0% 52,064 7,039,226 10,142,811 100.0% -1,742 916,563 0.0% UCITS 37,643 4,574,799 6,366,747 74.7% 35,946 5,298,768 7,635,506 75.3% -1,697 723,969 0.6%

Non-UCITS 16,163 1,547,864 2,154,163 25.3% 16,118 1,740,459 2,507,305 24.7% -45 192,595 -0.6% Source: European Fund and Asset Management Association (EFAMA, formerly FEFSI).

# FundsAssets € Bn



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In Europe, open-end mutual funds (excluding ETFs) have seen US$55.2 Bn net new inflows during the first six months of 2010 according to data from Lipper FMI. Bond funds have been the most popular with US$89.9 Bn net inflows, followed by mixed asset funds with US$46.5 Bn net inflows, while money market funds experienced net outflows of US$116.4 Bn. Figure 54: European mutual fund flows (excluding ETFs)

EXPOSURE (US$ Bn) 2002 2003 2004 2005 2006 2007 2008 2009 YTD JUN-10 Equity 31.8 65.9 72.8 120.4 124.4 -32.3 -229.2 131.2 19.7

Bond 9.8 87.5 60.8 158.7 -17.0 -109.3 -260.7 111.3 89.9

Mixed -26.0 -10.0 7.9 44.0 54.7 40.4 -60.6 43.4 46.5

Money Market 104.8 73.4 29.4 46.0 122.9 178.1 138.0 -65.9 -116.4

Money Market-Enhanced 1.7 14.5 15.6 36.4 46.0 -35.9 -59.5 -12.6 -0.9

Other 29.0 58.7 46.8 40.5 67.5 63.6 -23.1 13.3 16.5 Total 151.2 290.1 233.2 445.9 398.5 104.7 -495.1 220.6 55.2

Source: Lipper FMI. In Europe, ETFs have seen US$21.2 Bn net new inflows during the first six months of 2010 according to data from Lipper FMI. Equity funds have been the most popular with US$11.1 Bn net inflows, followed by bond funds with US$6.6 Bn net inflows. Figure 55: European ETF fund flows

EXPOSURE (US$ Bn) 2002 2003 2004 2005 2006 2007 2008 2009 YTD JUN-10 Equity 7.1 4.0 8.8 10.1 13.1 14.5 54.3 29.5 11.1

Bond 1.7 0.1 3.0 2.3 4.7 2.4 8.2 13.1 6.6

Mixed 0.1 -0.0 0.0 -0.0 0.3 0.1

Money Market 3.4 11.0 -5.1 -1.6

Other 0.6 1.6 0.8 3.1 9.5 5.0

Total 8.8 4.1 11.8 13.1 19.4 21.0 76.5 47.2 21.2 Source: Lipper FMI.





Figure 56: Average expenses of ETFs versus open-end mutual funds in Europe AVERAGE EXPOSURE TER (bps) Exchange Traded Funds* Alternative 25

Commodities 44

Country Exposure Europe - Equity 30

Country Exposure United States - Equity 38

Currency 30

Emerging Markets - Equity 69

European Sector Exposure - Equity 35

Eurozone Sector Exposure - Equity 42

Fixed Income 17

Global Exposure - Equity 49

International - Equity 56

Inverse 41

Leveraged 59

Leveraged Inverse 61

Mixed 72

Regional Exposure Europe - Equity 38

Regional Exposure Eurozone - Equity 23

Style - Equity 37 US Sector Exposure - Equity 52 Total – Equity ETFs 40 Total – Fixed Income ETFs 17 Total – All 35 Open-End Mutual Funds** Passive/Indexed European Equity 91

Passive/Indexed International Equity 78

Passive/Indexed Fixed Income 49

Actively Managed European Equity 180

Actively Managed International Equity 176

Actively Managed Fixed Income 100 *As at end February 2010. **Captured from Morningstar on 15 March 2010. Source: Morningstar, Global ETF Research and Implementation Strategy Team, BlackRock.



Figure 57: European exchange ETF statistics, as at end July 2010 TURNOVER IN € MN AVERAGE DAILY TURNOVER IN € MN EXCHANGE JUL-10 DEC-09 % CHANGE % MARKET SHARE JUL-10 DEC-09 % CHANGE % MARKET SHARE Deutsche Boerse 12,228.9 10,159.4 20.4% 24.2% 555.9 508.0 9.4% 24.2%

NYSE Euronext 7,346.4 5,900.1 24.5% 14.5% 333.9 268.2 24.5% 14.5%

NYSE Euronext Paris 6,389.5 4,835.5 32.1% 12.6% 290.4 219.8 32.1% 12.6%

NYSE Euronext Amsterdam 954.3 1,061.8 -10.1% 1.9% 43.4 48.3 -10.1% 1.9%

NYSE Euronext Brussels 2.5 2.8 -9.8% 0.0% 0.1 0.1 -9.8% 0.0%

Borsa Italiana 5,373.3 3,708.5 44.9% 10.6% 244.2 185.4 31.7% 10.6%

London Stock Exchange 5,586.1 5,065.5 10.3% 11.0% 253.9 241.2 5.3% 11.0%

SIX Swiss Exchange 2,619.7 2,813.6 -6.9% 5.2% 119.1 127.9 -6.9% 5.2%

NASDAQ OMX Stockholm 1,129.5 930.2 21.4% 2.2% 51.3 46.5 10.4% 2.2%

Oslo Stock Exchange 780.3 833.7 -6.4% 1.5% 35.5 41.7 -14.9% 1.5%

Istanbul Stock Exchange 515.6 553.0 -6.8% 1.0% 23.4 24.0 -2.5% 1.0%

Bolsa De Madrid 286.5 298.9 -4.2% 0.6% 13.0 14.9 -12.9% 0.6%

NASDAQ OMX Helsinki 33.6 49.3 -32.0% 0.1% 1.5 2.5 -38.1% 0.1%

Boerse Stuttgart 339.2 172.4 96.8% 0.7% 15.4 8.6 78.9% 0.7%

Budapest Stock Exchange 4.8 0.1 4264.1% 0.0% 0.2 0.0 4264.1% 0.0%

Athens Exchange 2.0 8.6 100.0% 0.0% 0.1 0.4 -78.1% 0.0%

Wiener Borse 2.7 2.7 1.0% 0.0% 0.1 0.1 -8.2% 0.0%

Irish Stock Exchange 1.5 1.6 -1.5% 0.0% 0.1 0.1 -6.0% 0.0%

Ljubljana Stock Exchange 0.0 0.1 -98.7% 0.0% 0.0 0.0 -98.7% 0.0%

Turquoise (not an official exchange) - - 0.0% 0.0% - - 0.0% 0.0%

Chi-X (not an official exchange) 842.1 366.7 129.6% 1.7% 38.3 15.9 140.1% 1.7%

European Reported OTC 13,464.4 8,542.7 57.6% 26.6% 612.0 388.3 57.6% 26.6%

BOAT 9,787.4 7,250.0 35.0% 19.4% 444.9 329.5 35.0% 19.4% European ETF Market 50,556.7 39,407.3 28.3% 100.0% 2,298 1,873.8 22.6% 100.0% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 58: European exchange accumulated turnover market share, 2010 # TOTAL ETF EXCHANGE LISTINGS JAN-10 FEB-10 MAR-10 APR-10 MAY-10 JUN-10 JUL-10 AUG-10 SEP-10 OCT-10 NOV-10 DEC-10 Deutsche Boerse 706 28.8% 25.8% 26.2% 26.2% 23.1% 24.4% 24.2%

NYSE Euronext 533 14.7% 15.4% 14.2% 18.4% 19.6% 15.2% 14.5%

NYSE Euronext Paris 426 12.6% 13.1% 11.9% 12.6% 13.1% 13.0% 12.6%

NYSE Euronext Amsterdam 106 2.1% 2.3% 2.4% 2.3% 2.2% 2.2% 1.9%

NYSE Euronext Brussels 1 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Borsa Italiana 442 10.4% 10.7% 11.3% 11.3% 9.1% 10.6% 10.6%

London Stock Exchange 410 11.8% 11.7% 11.1% 9.6% 8.8% 12.9% 11.0%

SIX Swiss Exchange 461 5.8% 5.9% 6.1% 5.3% 5.8% 6.5% 5.2%

Oslo Stock Exchange 6 2.4% 2.4% 2.1% 2.1% 1.8% 2.2% 1.5%

NASDAQ OMX Stockholm 46 1.7% 1.9% 2.3% 2.4% 2.8% 2.9% 2.2%

Istanbul Stock Exchange 10 1.4% 1.3% 1.4% 1.2% 0.7% 1.0% 1.0%

Bolsa De Madrid 44 0.8% 1.8% 0.8% 1.3% 1.4% 1.3% 0.6%

NASDAQ OMX Helsinki 1 0.0% 0.0% 0.1% 0.0% 0.1% 0.0% 0.1%

Boerse Stuttgart 353 0.5% 0.5% 0.5% 0.5% 0.4% 0.4% 0.7%

Budapest Stock Exchange 1 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Athens Exchange 2 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Wiener Borse 21 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Irish Stock Exchange 14 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Ljubljana Stock Exchange 1 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Turquoise (not an official exchange) 37 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Chi-X (not an official exchange) 29 0.9% 1.2% 1.0% 0.7% 0.8% 1.1% 1.7%

European Reported OTC 20.7% 21.5% 22.8% 24.5% 30.1% 21.4% 26.6%

TOTAL 3,117 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



ETFs IN CANADA We celebrate the 20th anniversary since the launch of the very first ETF globally. Twenty years ago on 9 March 1990 the first ETF was listed in Canada on the Toronto Stock Exchange (TSX): the TIPs (Toronto 35 Index Participation Fund) tracking the TSX 35 Index. It was followed by the HIPs (Hundred Index Participation Fund) tracking the TSX 100 Index on 26 September 1995. Ten years ago on 7 March 2000, the TIPs and HIPs ETFs were merged into the iUnits S&P/TSE Index Participation Fund (XIU CN): an ETF that was originally listed on 4 October 1999.

At the end of July 2010 the Canadian ETF industry had 151 locally domiciled ETFs, 176 exchange listings, and assets of US$32.5 Bn from four providers on one exchange.

YTD assets have increased by 13.9%, which is more than the 0.5% increase in the MSCI Canada Index in US dollar terms.

YTD the number of ETFs increased by 37.3% with 40 new ETFs launched.

YTD the average daily trading volume in US dollars has decreased by 19.5% to US$769.2 Mn.

iShares is the leading ETF provider in Canada in terms of assets with US$25.3 Bn under management in 36 ETFs, reflecting a 77.8% market share; Claymore Securities is second with US$3.9 Bn in 27 ETFs, a 12.1% market share at the end of July 2010.

Additionally, there was one other Exchange Traded Product (ETP) with 21 listings and assets of US$0.4 Bn from one provider on one exchange.

In Canada, for the first quarter of 2010, only 40% of active mutual funds in the Canadian Equity category were able to outperform the S&P/TSX Composite Index according to S&P. The Canadian Small/Mid Cap Equity category of mutual funds showed similar results against the S&P/TSX Completion Index. For the Canadian Focused Equity category, 58% of active funds outpaced the blended index (comprised of 50% S&P/TSX Composite, 25% S&P 500 & 25% S&P EPAC BMI LargeMidCap). Source: Index Versus Active Funds Scorecard for Canadian Funds. Standard & Poor’s Indices Versus Active Funds (SPIVA) Scorecard, First Quarter 2010.

Figure 59: ETF listings in Canada, as at end July 2010

Canada P Listings: 151 T Listings: 176 Providers: 4 AUM: US$32.5 Bn

P Listings = # Primary listings T Listings = # Total listings Providers = # Primary ETF Providers AUM = Assets Under Management in primary listing only


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Figure 60: Canada listed ETF and ETP asset growth ASSETS (US$ Bn) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 JUL-10 ETF Assets $0.4 $4.0 $3.1 $3.4 $5.5 $7.4 $10.6 $13.0 $18.0 $15.7 $28.5 $32.5

ETP Assets $0.4

# ETFs 1 3 14 15 16 16 20 26 46 77 109 151

# ETPs 1 Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 61: ETF providers in Canada ranked by AUM, as at end July 2010 JUL-10 YTD CHANGE AUM # AUM % % MARKET PROVIDER # ETFs (US$ BN) % TOTAL PLANNED # ETFs % ETFs (US$ BN) AUM SHARE iShares 36 $25.3 77.8% 0 6 20.0% $2.7 12.2% -1.2%

Claymore Securities 27 $3.9 12.1% 8 2 8.0% $0.7 20.5% 0.7%

BetaPro Management 58 $2.6 7.9% 2 16 38.1% $0.0 0.4% -1.1%

BMO Asset Management 30 $0.7 2.2% 0 17 100.0% $0.5 100.0% 1.6% Total 151 $32.5 100.0% 10 41 37.3% $4.0 13.9% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 62: ETF providers in Canada by average daily US dollar turnover, as at end July 2010 AVERAGE DAILY TURNOVER (US$ MN) % MARKET % MARKET CHANGE % PROVIDER DEC-09 SHARE JUL-10 SHARE (US$ MN) CHANGE BetaPro $573.2 60.0% $443.3 57.6% -$129.9 -22.7%

iShares $358.6 37.5% $301.4 39.2% -$57.2 -16.0%

Claymore $22.4 2.3% $18.4 2.4% -$4.0 -17.9%

BMO AM $1.0 0.1% $6.1 0.8% $5.1 517.4% Total $955.3 100.0% $769.2 100.0% -$186.1 -19.5% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

# ProductsAssets US$ Bn



North America - Equity, 61.8%Fixed Income - All (ex-Cash), 21.8%Commodities, 9.4%Global (ex-US) - Equity, 3.2%Emerging Markets - Equity, 1.8%Global - Equity, 0.9%Fixed Income - Cash (Money Market), 0.6%Mixed, 0.4%Currency, 0.1%Asia Pacific - Equity, 0%

Figure 63: Canadian ETF assets by type of exposure, as at end July 2010 JUL-10 YTD CHANGE AUM AUM % % MARKET EXPOSURE # ETFs (US$ BN) % TOTAL # ETFs % ETFs (US$ BN) AUM SHARE North America - Equity 57 $20.1 61.8% 14 32.6% $2.3 12.9% -0.5%

Fixed Income - All (ex-Cash) 23 $7.1 21.8% 6 35.3% $1.7 30.6% 2.8%

Commodities 29 $3.1 9.4% 6 26.1% -$0.3 -10.1% -2.5%

Global (ex-US) - Equity 2 $1.0 3.2% 0 0.0% $0.0 -0.5% -0.5%


Global - Equity 10 $0.3 0.9% 2 25.0% $0.1 31.2% 0.1%

Fixed Income - Cash (Money Market) 6 $0.2 0.6% 5 500.0% $0.1 197.2% 0.4%

Mixed 9 $0.1 0.4% 2 28.6% $0.0 39.4% 0.1%

Currency 2 $0.0 0.1% 0 0.0% $0.0 -25.3% 0.0%

Asia Pacific - Equity 1 $0.0 0.0% 0 0.0% $0.0 -47.7% 0.0% Total 151 $32.5 100.0% 41 37.3% $4.0 13.9% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 64: ETP providers in Canada ranked by assets, as at end July 2010 JUL-10 YTD CHANGE ASSETS # ASSETS % % MARKET PROVIDER # ETPs (US$ BN) % TOTAL PLANNED # ETPs % ETPs (US$ BN) ASSETS SHARE Claymore Securities 1 $0.4 100.0% 0 1 100.0% $0.4 100.0% 100.0% Total 1 $0.4 100.0% 0 1 100.0% $0.4 100.0% To avoid double counting, assets shown above refer only to primary listings. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



ETFs IN ASIA PACIFIC (EX-JAPAN) At the end of July 2010 the Asia Pacific (ex-Japan) ETF industry had 176 locally domiciled ETFs, 280 exchange listings, and assets of US$47.4 Bn from 53 providers on 13 exchanges.

YTD assets have increased by 21.7%, compared to the 1.8% decrease in the MSCI AC Asia Pacific ex-Japan Index in US dollar terms.

YTD the number of ETFs increased by 37.5% with 49 new ETFs launched, while two ETFs were delisted.


State Street Global Advisors is the leading ETF provider in Asia Pacific (ex-Japan) in terms of assets with US$10.5 Bn under management in six ETFs, reflecting a 22.1% market share; iShares is second with US$9.4 Bn in 15 ETFs, a 19.9% market share at the end of July 2010.

Additionally, there were 13 other Exchange Traded Products (ETPs) with 16 listings and assets of US$1.0 Bn from nine providers on five exchanges.

Figure 65: ETF listings in Asia Pacific (ex-Japan), as at end July 2010

Australia India New Zealand Taiwan P Listings: 11 P Listings: 14 P Listings: 6 P Listings: 12 T Listings: 32 T Listings: 14 T Listings: 6 T Listings: 14 Providers: 4 Providers: 6 Providers: 2 Providers: 2 AUM: US$2.9 Bn AUM: US$0.3 Bn AUM: US$0.4 Bn AUM: US$3.0 Bn

China Indonesia Singapore Thailand P Listings: 11 P Listings: 1 P Listings: 20 P Listings: 3 T Listings: 11 T Listings: 1 T Listings: 71 T Listings: 3 Providers: 9 Providers: 1 Providers: 8 Providers: 2 AUM: US$9.7 Bn AUM: US$0.0 Bn AUM: US$2.6 Bn AUM: US$0.1 Bn

Hong Kong Malaysia South Korea P Listings: 37 P Listings: 4 P Listings: 57 T Listings: 66 T Listings: 5 T Listings: 57 Providers: 10 Providers: 3 Providers: 11 AUM: US$23.8 Bn AUM: US$0.4 Bn AUM: US$4.3 Bn P Listings = # Primary listings T Listings = # Total listings Providers = # Primary ETF Providers AUM = Assets Under Management in primary listings only


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China AM, 18.8%

iShares, 28.6%

E Fund Mgt, 11.4%

Samsung ITM, 8.9%

SSgA, 4.5%

Others, 27.9%

Figure 66: Asia Pacific (ex-Japan) listed ETF and ETP asset growth ASSETS (US$ Bn) 2001 2002 2003 2004 2005 2006 2007 2008 2009 JUL-10 ETF Assets $3.7 $3.8 $6.6 $8.6 $10.5 $18.1 $27.0 $23.8 $38.5 $47.4 ETP Assets $0.1 $0.5 $0.8 $1.0 ETF/ETP Assets Total $3.7 $3.8 $6.6 $8.6 $10.5 $18.1 $27.2 $24.2 $39.3 $48.3 # ETFs 4 11 20 27 32 49 68 96 129 176 # ETPs 4 6 12 13 # ETFs/ETPs Total 4 11 20 27 32 49 72 102 141 189 Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 67: Top five Asia Pacific (ex-Japan) ETF providers by average daily US dollar turnover, as at end July 2010 AVERAGE DAILY TURNOVER (US$ MN) % MARKET % MARKET CHANGE % PROVIDER DEC-09 SHARE JUL-10 SHARE (US$ MN) CHANGE China AM $335.2 37.6% $146.5 18.8% -$188.7 -56.3%

iShares $189.3 21.2% $223.7 28.6% $34.4 18.2%

E Fund Mgt $118.9 13.3% $88.8 11.4% -$30.1 -25.3%

Samsung ITM $47.9 5.4% $69.3 8.9% $21.4 44.7%

SSgA $32.1 3.6% $35.5 4.5% $3.4 10.5%

Others $168.9 18.9% $217.7 27.9% $48.8 28.9% Total $892.4 100.0% $781.6 100.0% -$110.8 -12.4% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg. Figure 68: ETF providers in Asia Pacific (ex-Japan) ranked by AUM, as at end July 2010

JUL-10 YTD CHANGE # # AUM % # # % AUM % % MARKET PROVIDER ETFs LISTINGS (US$ BN) TOTAL PLANNED ETFs ETFs (US$ BN) AUM SHARE State Street Global Advisors 6 8 $10.5 22.1% 1 0 0.0% $0.8 7.8% -3.1%

iShares 15 39 $9.4 19.9% 0 2 15.4% $1.6 20.3% -0.4%

Hang Seng Investment Management 3 5 $5.9 12.5% 0 0 0.0% $0.6 11.8% -1.3%

China Asset Management 2 2 $3.6 7.7% 2 0 0.0% -$0.1 -3.3% -2.1%

E Fund Management 2 2 $3.1 6.5% 1 1 100.0% $1.8 133.9% 3.1%

Polaris 8 9 $2.2 4.6% 3 0 0.0% $0.1 3.2% -0.9%

Samsung Investment Trust Management 16 16 $2.1 4.4% 0 0 0.0% $0.5 31.9% 0.3%

Lyxor Asset Management 2 32 $0.9 2.0% 1 0 0.0% $0.1 18.7% -0.1%

Woori Asset Management 10 10 $0.9 1.9% 8 2 25.0% $0.5 123.1% 0.8%

BOCI-Prudential Asset Management 3 3 $0.9 1.9% 0 0 0.0% -$0.1 -7.1% -0.6%

Fubon Asset Management 4 4 $0.9 1.8% 0 0 0.0% $0.3 49.1% 0.3%

Hua An Fund Management 1 1 $0.7 1.6% 1 0 0.0% $0.5 292.5% 1.1%

Bank Of Communications 1 1 $0.6 1.3% 0 0 0.0% $0.6 100.0% 1.3%

db x-trackers 21 63 $0.6 1.3% 0 21 100.0% $0.6 100.0% 1.3%

AIG-Huatai Fund Management 1 1 $0.5 1.1% 0 0 0.0% -$0.1 -14.3% -0.5%

China Southern Fund Management 1 1 $0.5 1.0% 0 1 100.0% $0.5 100.0% 1.0% continued…




Figure 68 (continued…): ETF providers in Asia Pacific (ex-Japan) ranked by AUM, as at end July 2010

JUL-10 YTD CHANGE # # AUM % # # % AUM % % MARKET PROVIDER ETFs LISTINGS (US$ BN) TOTAL PLANNED ETFs ETFs (US$ BN) AUM SHARE Mirae Asset MAPS Global Investments 14 14 $0.5 1.0% 0 3 27.3% $0.1 20.4% 0.0%

KB Asset Management 4 4 $0.3 0.7% 0 1 33.3% $0.1 24.0% 0.0%

HSBC 1 1 $0.3 0.6% 0 0 0.0% $0.0 -1.6% -0.2%

DBS Asset Management 2 2 $0.3 0.6% 0 0 0.0% $0.0 5.7% -0.1%

Benchmark Asset Management 7 7 $0.3 0.6% 7 1 16.7% $0.1 23.7% 0.0%

Korea Investment Trust Management 5 5 $0.3 0.5% 0 0 0.0% -$0.1 -20.8% -0.3%

Fortune SGAM Fund Management 1 1 $0.2 0.5% 0 1 100.0% $0.2 100.0% -99.5%

Smartshares Limited 5 5 $0.2 0.5% 0 0 0.0% $0.0 -3.9% -0.1%

i-VCAP Management 1 1 $0.2 0.4% 0 0 0.0% $0.0 10.2% -0.1%

ICBC Credit Suisse Asset Management 1 1 $0.2 0.4% 0 0 0.0% -$0.2 -53.9% -0.6%

Vanguard 1 3 $0.2 0.4% 2 0 0.0% $0.1 219.8% 0.2%

AmInvestment Management 2 2 $0.2 0.3% 0 0 0.0% $0.0 7.5% 0.0%

Bosera Asset Management 1 1 $0.2 0.3% 1 1 100.0% $0.2 100.0% -99.7%

AMP 1 1 $0.1 0.3% 0 0 0.0% -$0.1 -49.0% -0.4%

Yurie Asset Management 2 2 $0.1 0.2% 0 0 0.0% $0.0 -10.5% -0.1%

One Asset Management 2 2 $0.1 0.1% 0 0 0.0% $0.0 -14.8% -0.1%

Sensible Asset Management 1 1 $0.1 0.1% 0 0 0.0% $0.0 31.7% 0.0%

UOB Asset Management 1 1 $0.0 0.1% 0 0 0.0% -$0.2 -78.0% -0.5%

CIMB-Principal Asset Management 2 3 $0.0 0.1% 1 1 100.0% -$0.1 -72.4% -0.3%

Prudential Asset Management 2 2 $0.0 0.1% 0 1 100.0% $0.0 52.0% 0.0%

KTB Asset Management 1 1 $0.0 0.1% 0 0 0.0% $0.0 151.7% 0.0%

Ping An 1 1 $0.0 0.1% 0 1 100.0% $0.0 100.0% -99.9%

Kotak Mahindra Asset Management 3 3 $0.0 0.0% 0 1 50.0% $0.0 149.4% 0.0%

Daishin Investment Trust Management 1 1 $0.0 0.0% 0 0 0.0% $0.0 7.7% 0.0%

Tong Yang Investment Trust Management 1 1 $0.0 0.0% 0 0 0.0% $0.0 -17.3% 0.0%

Da Cheng International Asset Management 1 1 $0.0 0.0% 0 1 100.0% $0.0 100.0% 0.0%

China International Capital Corp 1 1 $0.0 0.0% 0 1 100.0% $0.0 100.0% -100.0%

Daiwa Asset Management 1 1 $0.0 0.0% 1 0 0.0% $0.0 0.0% 0.0%

Russell Investments 1 1 $0.0 0.0% 0 1 100.0% $0.0 100.0% 0.0%

Australian Index Investments 6 6 $0.0 0.0% 0 6 100.0% $0.0 100.0% -100.0%

TMB Asset Management 1 1 $0.0 0.0% 0 0 0.0% $0.0 -2.1% 0.0%

Hyundai Investments 1 1 $0.0 0.0% 0 1 100.0% $0.0 100.0% 0.0%

Indo Premier Securities 1 1 $0.0 0.0% 0 0 0.0% $0.0 -7.3% 0.0%

Reliance Capital Asset Management 1 1 $0.0 0.0% 4 0 0.0% $0.0 -4.2% 0.0%

Quantum Asset Management 1 1 $0.0 0.0% 0 0 0.0% $0.0 15.9% 0.0%

PRUDENTIAL ICICI 1 1 $0.0 0.0% 0 0 0.0% $0.0 5.2% 0.0%

UTI Asset Management 1 1 $0.0 0.0% 1 0 0.0% $0.0 -90.6% 0.0%

Allianz SE - - - - 1 - - - - -

CCB Principal Asset Management - - - - 1 - - - - -

Government Service Insurance Systems - - - - 1 - - - - -

Guotai Asset Management - - - - 1 - - - - -

Motilal Oswal Asset Management - - - - 1 - - - - -

Penghua Fund Management - - - - 3 - - - - -

Tata Mutual Fund - - - - 1 - - - - -

Other (Planned) - - - - 5 - - - - - Total 176 280 $47.4 100.0% 48 48 37.5% $8.4 21.7% To avoid double counting, assets shown above refer only to primary listings. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



Figure 69: ETP providers in Asia Pacific (ex-Japan) ranked by assets, as at end July 2010

JUL-10 YTD CHANGE ASSETS # ASSETS % % MARKET PROVIDER # ETPs (US$ BN) % TOTAL PLANNED # ETPs % ETPs (US$ BN) ASSETS SHARE ETF Securities 5 $0.6 59.1% 0 0 0.0% $0.0 2.0% -10.0%

Benchmark Asset Management 1 $0.2 19.3% 0 0 0.0% $0.1 75.9% 6.2%

UTI Asset Management 1 $0.1 7.7% 0 0 0.0% $0.0 43.5% 1.3%

Reliance Capital Asset Management 1 $0.1 6.8% 0 0 0.0% $0.0 35.8% 0.8%

Kotak Mahindra Asset Management 1 $0.0 2.8% 0 0 0.0% $0.0 34.7% 0.3%

SBI Funds Management 1 $0.0 2.5% 0 0 0.0% $0.0 20.5% 0.0%

Religare India Asset Management 1 $0.0 0.7% 0 1 100.0% $0.0 100.0% 0.7%

Hyundai Investments 1 $0.0 0.6% 0 0 0.0% $0.0 -41.2% 0.6%

Quantum Asset Management 1 $0.0 0.4% 0 0 0.0% $0.0 44.1% 0.1%

Axis Mutual Fund - - - 1 - - - - -

Birla Sun Life Mutual Fund - - - 1 - - - - -

Cydinar Sdn Bhd - - - 1 - - - - -

HDFC Mutual Fund - - - 1 - - - - -

ING OptiMix - - - 1 - - - - -

Prudential ICICI - - - 1 - - - - -

RiddiSiddhi Bullions - - - 1 - - - - -

RUSAL - - - 1 - - - - -

Tata Mutual Fund - - - 1 - - - - -

Other (Planned ETP) - - - 1 - - - - - Total 13 $1.0 100.0% 10 1 8.3% $0.1 17.8% To avoid double counting, assets shown above refer only to primary listings.




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In Asia Pacific (ex-Japan), open-end mutual funds (excluding ETFs) have seen US$29.0 Bn net outflows during the first six months of 2010 according to data from Strategic Insight. Mixed asset funds were the most popular with US$3.3 Bn net inflows, while money market funds experienced US$27.3 Bn net outflows. Figure 70: Asia Pacific (ex-Japan) mutual fund flows (excluding ETFs)

EXPOSURE (US$ Bn) 2005 2006 2007 2008 2009 YTD JUN-10 Equity 24.1 60.2 273.7 -15.6 8.0 -6.8

Bond 1.7 4.9 15.2 5.3 16.8 1.2

Mixed 11.1 10.3 20.7 -12.1 3.6 3.3

Money Market 7.9 -9.1 5.7 41.6 -0.6 -27.3

Real Estate 1.8 6.8 9.0 -2.0 1.4 0.6

Guaranteed 1.1 2.1 0.3 0.6 1.2 0.8

Other 0.4 0.8 2.2 -2.2 -1.0 -0.7

Total 48.0 75.9 326.7 15.6 29.4 -29.0 Source: Strategic Insight Simfund Global.

In Asia Pacific (ex-Japan), ETFs have seen US$8.4 Bn net inflows during the first six months of 2010 according to data from Strategic Insight. Equity funds were the most popular with US$8.1 Bn net inflows, followed by bond funds with US$0.2 Bn net inflows. Figure 71: Asia Pacific (ex-Japan) ETF fund flows

EXPOSURE (US$ Bn) 2005 2006 2007 2008 2009 YTD JUN-10 Equity 0.3 0.9 2.0 16.3 3.5 8.1

Bond 1.8 0.3 0.1 0.0 0.9 0.2

Mixed 0.1 0.2 -0.2 0.0 0.0 0.0

Money Market 0.0 0.0 0.0 0.1 0.0 0.0

Real Estate -0.1 0.0 0.0 0.0 0.1 0.0

Guaranteed 0.0 0.0 0.0 0.0 0.0 0.0

Other 0.0 0.0 0.2 -0.1 0.2 0.1 Total 2.1 1.4 2.2 16.2 4.8 8.4






ETFs IN JAPAN At the end of July 2010 the Japanese ETF industry had 72 locally domiciled ETFs, 75 exchange listings, and assets of US$25.8 Bn from six providers on two exchanges.

YTD assets have increased by 4.9%, compared to the 0.7% decrease in the MSCI Japan Index in US dollar terms.

YTD the number of ETFs increased by 5.9% with four new ETFs launched.


Nomura Asset Management is the leading ETF provider in Japan in terms of assets with US$13.8 Bn under management in 30 ETFs, reflecting a 53.4% market share; Nikko Asset Management is second with US$5.6 Bn in 14 ETFs, a 21.7% market share at the end of July 2010.

Additionally, there were nine other Exchange Traded Products (ETPs) with 29 listings and assets of US$0.3 Bn from four providers on two exchanges.

Figure 72: ETF listings in Japan, as at end July 2010

Japan P Listings: 72 T Listings: 75 Providers: 6 AUM: US$25.8 Bn



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Figure 73: Japanese listed ETF and ETP asset growth ASSETS (US$ Bn) 2001 2002 2003 2004 2005 2006 2007 2008 2009 JUL-10 ETF Assets $6.6 $21.0 $27.6 $30.3 $31.8 $34.6 $34.2 $27.4 $24.6 $25.8 ETP Assets $0.0 $0.3 $0.3 $0.3 ETF/ETP Assets Total $6.6 $21.0 $27.6 $30.3 $31.8 $34.6 $34.2 $27.8 $24.9 $26.2 # ETFs 8 18 18 15 13 13 15 61 68 72 # ETPs 1 4 5 9 # ETFs/ETPs Total 8 18 18 15 13 13 16 65 73 81 Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 74: ETF providers in Japan ranked by AUM, as at end July 2010 JUL-10 YTD CHANGE # # AUM % # # % AUM % % MARKET PROVIDER ETFs LISTINGS (US$ BN) TOTAL PLANNED ETFs ETFs (US$ BN) AUM SHARE Nomura Asset Management 30 30 $13.8 53.4% 2 0 0.0% $0.4 3.2% -0.9%

Nikko Asset Management 14 14 $5.6 21.7% 0 4 40.0% -$0.1 -2.2% -1.6%

Daiwa Asset Management 22 22 $5.1 19.7% 0 0 0.0% $0.2 3.1% -0.3%

Mitsubishi UFJ Asset Management 4 4 $1.3 5.0% 0 0 0.0% $0.8 143.9% 2.9%

iShares 1 1 $0.0 0.1% 0 0 0.0% $0.0 -28.1% -0.1%

Simplex Asset Management 1 1 $0.0 0.0% 0 0 0.0% $0.0 -0.4% 0.0%

EasyETF - 1 - - - - - - - -

Samsung Investment Trust Management - 1 - - - - - - - -

State Street Global Advisors - 1 - - - - - - - - Total 72 75 $25.8 100.0% 2 4 5.9% $1.2 4.9% To avoid double counting, assets shown above refer only to primary listings. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 75: Top five Japanese ETF providers by average daily US dollar turnover, as at end July 2010 AVERAGE DAILY TURNOVER (US$ MN) % MARKET % MARKET CHANGE % PROVIDER DEC-09 SHARE JUL-10 SHARE (US$ MN) CHANGE NNomura AM $99.3 64.5% $61.3 58.3% -$38.0 -38.3%

Nikko AM $37.1 24.1% $27.8 26.4% -$9.3 -25.1%

Daiwa AM $16.7 10.9% $12.2 11.6% -$4.6 -27.4%

Mitsubishi UFJ AM $0.4 0.2% $3.7 3.5% $3.3 924.1%

Simplex AM $0.0 0.0% $0.1 0.1% $0.1 100.0%

Others $0.5 0.3% $0.1 0.1% -$0.4 -74.7% Total $154.0 100.0% $105.2 100.0% -$48.4 -31.7% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.




Nikkei 225, 45.2%TOPIX, 44.1%Japanese Sectors, 4.8%International, 3%Nikkei 300, 0.4%Small Cap, 0.1%Growth, 0%Other, 2.4%

Figure 76: ETP providers in Japan ranked by assets, as at end July 2010 JUL-10 YTD CHANGE # # ASSETS % # # % ASSETS % % MARKET PROVIDER ETPs LISTINGS (US$ BN) TOTAL PLANNED ETPs ETPs (US$ BN) ASSETS SHARE Nomura Asset Management 3 3 $0.2 66.7% 0 -1 -25.0% $0.0 -9.5% -21.4%

Simplex Asset Management 1 1 $0.1 16.8% 0 0 0.0% $0.0 67.6% 4.8%

Mitsubishi UFJ Asset Management 4 4 $0.1 15.5% 0 4 100.0% $0.1 100.0% 15.5%

Mizuho Asset Management 1 1 $0.0 1.1% 0 1 100.0% $0.0 100.0% 1.1%

ETF Securities - 19 - - 0 - - - - -

State Street Global Advisors - 1 - - 0 - - - - -

Other (Planned ETP) - - - - 1 - - - - - Total 9 29 $0.3 100.0% 1 4 80.0% $0.1 19.6% To avoid double counting, assets shown above refer only to primary listings. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 77: Japanese ETF assets by type of exposure, as at end July 2010 JUL-10 YTD CHANGE AUM AUM % % MARKET EXPOSURE # ETFs (US$ BN) % TOTAL # ETFs % ETFs (US$ BN) AUM SHARE Nikkei 225 5 $11.7 45.2% 0 0.0% -$0.2 -1.8% -3.1%

TOPIX 8 $11.4 44.1% 0 0.0% $0.8 7.8% 1.2%

Japanese Sectors 43 $1.2 4.8% 0 0.0% $0.0 -3.6% -0.4%

International 9 $0.8 3.0% 2 28.6% $0.1 8.7% 0.1%

Nikkei 300 1 $0.1 0.4% 0 0.0% $0.0 -1.3% 0.0%

Small Cap 1 $0.0 0.1% 0 0.0% $0.0 2.8% 0.0%

Growth 1 $0.0 0.0% 0 0.0% $0.0 2.9% 0.0%




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Figure 78: Mutual fund flows in Japan (excluding ETFs)

EXPOSURE (US$ Bn) 2005 2006 2007 2008 2009 YTD JUN-10 Equity 10.5 41.5 40.0 -4.6 7.1 2.7

Bond 40.0 14.8 21.4 27.3 26.6 31.0

Mixed 15.3 42.7 49.5 -9.4 -11.1 -5.7

Money Market 0.3 0.0 2.4 2.6 0.1 0.0

Real Estate 6.2 9.7 7.7 -2.1 15.2 7.1

Guaranteed 0.2 3.8 7.4 4.3 0.6 -1.6

Other 1.4 0.7 -1.3 -0.4 0.4 0.1 Total 73.9 113.2 127.1 17.7 38.8 33.6


In Japan, ETFs have seen US$2.1 Bn net inflows during the first six months of 2010 according to data from Strategic Insight. Equity funds appeared popular with US$2.1 Bn net inflows.

Figure 79: ETF fund flows in Japan

EXPOSURE (US$ Bn) 2005 2006 2007 2008 2009 YTD JUN-10 Equity -4.9 2.3 2.9 2.9 -5.1 2.1

Bond 0.0 0.0 0.0 0.0 0.0 0.0

Mixed 0.0 0.0 0.0 0.2 -0.2 0.0

Real Estate 0.0 0.0 0.0 0.1 0.0 0.0

Other 0.0 0.0 0.2 0.1 -0.1 0.0 Total -4.9 2.3 3.1 3.3 -5.3 2.1






ETFs IN THE MIDDLE EAST AND AFRICA

Figure 80: ETF listings in the Middle East and Africa, as at end July 2010

Saudi Arabia South Africa UAE P Listings: 2 P Listings: 24 P Listings: 1 T Listings: 2 T Listings: 24 T Listings: 1 Providers: 1 Providers: 7 Providers: 1 AUM: US$0.0 Bn AUM: US$1.8 Bn AUM: US$0.0 Bn



Figure 81: ETF providers in the Middle East and Africa ranked by AUM, as at end July 2010 JUL-10 YTD CHANGE AUM # AUM % % MARKET PROVIDER # ETFs (US$ BN) % TOTAL PLANNED # ETFs % ETFs (US$ BN) AUM SHARE Satrix Managers 7 $1.3 70.3% 1 0 0.0% -$0.1 -5.1% -5.7%

db x-trackers 5 $0.2 9.5% 0 0 0.0% $0.0 8.2% 0.5%

Absa Capital 7 $0.1 8.1% 0 0 0.0% $0.0 0.8% -0.1%

Bips Investment Managers 2 $0.1 7.3% 0 0 0.0% $0.1 100.0% 4.2%

Fortress Asset Managers 1 $0.0 2.3% 0 0 0.0% $0.0 15.4% 0.3%

Investec Fund Management 1 $0.0 1.3% 0 0 0.0% $0.0 -12.8% -0.2%

Falcom Financial Services 2 $0.0 0.7% 0 2 100.0% $0.0 100.0% 0.7%

Nedbank Capital 1 $0.0 0.2% 0 1 100.0% $0.0 100.0% 0.2%

National Bank of Abu Dhabi 1 $0.0 0.2% 2 1 100.0% $0.0 100.0% 0.2%

Al Mal Capital - - - 1 - - - - -

Gaon Investment House - - - 2 - - - - -

Other (Planned) - - - 15 - - - - - Total 27 $1.8 100.0% 21 4 17.4% $0.0 2.6% Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

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Figure 82: Middle East and Africa listed ETF and ETP asset growth

ASSETS (US$ Bn) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 JUL-10 ETF Assets $0.3 $0.6 $0.8 $1.2 $1.6 $1.2 $2.2 $1.2 $1.8 $1.8

ETP Assets $0.0 $0.1 $0.1 $0.2 $0.5 $0.4 $4.5 $9.1 $8.1 $14.8 $14.5

# ETFs 1 3 4 5 7 8 11 17 23 27

# ETPs 1 1 1 3 19 42 95 212 247 283 295

Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, Bank of Israel.




ETFs IN LATIN AMERICA At the end of July 2010 the Latin American ETF industry had 21 locally domiciled ETFs, 331 exchange listings, and assets of US$10.0 Bn from three providers on three exchanges.

YTD assets have increased by 2.1%, compared to the 1.1% decrease in the MSCI EM Latin America Index in US dollar terms.

YTD the average daily trading volume in US dollars has increased by 10.3% to US$245.7 Mn.

iShares is the largest ETF provider in terms of assets with US$7.7 Bn under management in 18 ETFs, reflecting 77.1% market share; Banco Itau is second with US$1.3 Bn in one locally domiciled ETF; a 12.7% market share at the end of July 2010.

There are 260 ETFs cross listed in Mexico at the end of July 2010 from 11 providers, while there are 310 ETFs registered for sale in Chile from 10 providers, and 290 ETFs registered for sale in Peru from 15 providers.

The first ETF to launch in Latin America was the NAFTRAC, designed to track the Mexican Bolsa Index. Since launching in 2002 in Mexico by Nacional Financiera it became the largest ETF in the region with US$6.0 Bn in assets under management at the end of July 2010, was acquired by iShares on 14 May 2009, and has since been renamed iShares NAFTRAC.

Figure 83: ETF listings in Latin America, as at end July 2010


*ETFs registered for sale in Peru and Chile are only available as admissible investments for pension funds. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, Comision Clasificadora de Riesgo (CCR), Superintendencia de Banca (SBS).

Figure 84: ETF providers in Latin America ranked by AUM, as at end July 2010

# CROSS #CROSS # REGISTERED # REGISTERED # # LOCAL LISTINGS LISTINGS FOR SALE FOR SALE AUM PLANNED PROVIDER ETFs IN MEXICO IN CHILE IN CHILE* IN PERU* (US$ BN) % TOTAL NEW ETFs iShares 18 131 50 169 195 $7.7 77.1% 1

Banco Itau 1 - - - - $1.3 12.7% 0

BBVA Asset Management 2 5 - - - $1.0 10.2% 0

Bank of New York - - - - 1 - - -

AMUNDI Investment Solutions - - - 2 2 - - -

Credit Suisse Asset Management - - - - 2 - - -

db x-trackers - - - 12 2 - - -

Direxion - 4 - - - - - -

EasyETF - 10 - 6 2 - - -

Fidleity Management & Research - - - - 1 - - -

Lyxor Asset Management - 4 - 32 7 - - -

PowerShares - 1 - 5 1 - - -

ProShares - 18 - - - - - -

Rydex - - - - 1 - - -

State Street Global Advisors - 27 - 24 25 - - -

UBS Global Asset Management - - - - 2 - - -

Van Eck Associates Corp - 13 - 11 8 - - -

Vanguard - 38 - 30 39 - - -

WisdomTree Investments - 9 - 19 - - - -

XACT Fonder - - - - 2 - - - Total 21 260 50 310 290 $10.0 100.0% 1 *ETFs registered for sale in Peru and Chile are only available as admissible investments for pension funds. AUM reflects only the assets in the locally listed ETFs to avoid double counting. Source: Global ETF Research and Implementation Strategy Team, BlackRock; Bloomberg; Comision Clasificadora de Riesgo (CCR); Superintendencia de Banca (SBS).

Brazil Mexico P Listings: 7 P Listings: 14 T Listings: 7 T Listings: 274 Providers: 2 Providers: 2 AUM: US$1.6 Bn AUM: US$8.5 Bn

Chile Peru # Registrations*: 310 # Registrations*: 290 P Listings: - T Listings: 50 Providers: - AUM: -

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Figure 85: Latin America ETF asset growth ASSETS (US$ Bn) 2002 2003 2004 2005 2006 2007 2008 2009 JUL-10 ETF Assets $0.1 $0.4 $0.4 $1.3 $2.6 $6.0 $5.1 $9.8 $10.0

# ETFs 1 1 2 2 2 6 10 17 21


Figure 86: Latin America net new ETF assets ASSETS (US$ Mn) 2002 2003 2004 2005 2006 2007 2008 2009 YTD JUL-10 ETF Net Flows $148.7 $209.2 ($360.2) $720.3 $619.4 $1,919.7 $2,876.2 $1,301.9 ($1,122.9) Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.


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Figure 87: Latin America mutual fund industry MUTUAL FUND ASSETS (US$ Mn) 2004 2005 2006 2007 2008 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Latin America Total Assets 271,739 368,579 506,256 723,229 562,308 582,617 722,488 844,300 894,635 924,050

Argentina Assets 2,355 3,626 6,153 6,789 3,867 3,606 3,717 3,949 4,470 4,522

Brazil Assets 220,586 302,927 418,771 615,365 479,321 498,259 623,925 741,994 783,970 803,675

Chile Assets 12,588 13,969 17,700 24,444 17,587 22,434 26,617 28,563 34,227 32,920

Costa Rica Assets 1,053 804 1,018 1,203 1,098 1,264 1,517 1,704 1,309 1,570

Mexico Assets 35,157 47,253 62,614 75,428 60,435 57,054 66,712 68,090 70,659 81,363

# MUTUAL FUNDS Latin America Total # Funds 4,108 4,094 4,593 5,395 6,422 6,627 6,844 6,971 7,158 7,404

Argentina # Funds 186 200 223 241 253 251 257 256 252 253

Brazil # Funds 2,859 2,685 2,907 3,381 4,169 4,302 4,494 4,609 4,744 4,906

Chile # Funds 537 683 926 1,260 1,484 1,565 1,594 1,623 1,691 1,766

Costa Rica # Funds 115 110 100 93 85 77 77 73 64 69

Mexico # Funds 411 416 437 420 431 432 422 410 407 410 Source: Investment Company Institute (ICI).

Assets US$ Mn # Mutual Funds



Consumer Discretionary, 10.5%

Consumer Staples, 3.5%

Energy, 10.3%

Financials, 10.2%

Healthcare, 12.3%

Industrials, 11.6%

Information Technology, 15.8%

Materials, 18.8%

Telecommunications, 3.1%

Utilities, 3.7%

Basic Materials, 3.3%Consumer Goods, 9.9%

Consumer Services, 11.4%Financials, 16.4%

Health Care, 12.4%Industrials, 12.8%Oil & Gas, 10.8%

Technology, 16.4%Telecommunications, 2.7%

Utilities, 3.9%

Implementing asset allocation with ETFs ETFs can be used for targeted sector exposure. Sector ETFs can be used for the tactical portion of a portfolio or to gain exposure to underrepresented sectors in a portfolio. They can also serve as the building blocks for a sector model. Figure 88: Sector weights and YTD performance World, Emerging Markets MSCI WORLD MSCI EMERGING MARKETS # % % YTD # % % YTD SECTOR STOCKS WEIGHT RETURN STOCKS WEIGHT RETURN Consumer Discretionary 242 9.9% 2.7% 72 6.5% 7.3%

Consumer Staples 125 10.4% -0.3% 63 6.8% 9.2%

Energy 113 10.3% -10.4% 47 13.9% -8.2%

Financials 341 20.7% -3.1% 174 25.9% 3.0%

Healthcare 118 9.8% -10.0% 13 0.8% 4.3%

Industrials 264 11.0% 3.9% 103 6.8% 4.1%

Information Technology 150 11.5% -4.2% 85 13.3% -4.9%

Materials 164 7.6% -6.4% 106 14.0% -1.8%

Telecommunications 52 4.4% -4.7% 45 8.3% 2.4%

Utilities 89 4.4% -8.2% 47 3.7% -0.5% Total 1,658 100.0% -3.7% 755 100.0% 0.2% United States S&P 500 # % % YTD SECTOR STOCKS WEIGHT RETURN Consumer Discretionary 39 10.5% -6.2%

Consumer Staples 32 3.5% -3.1%

Energy 56 10.3% 8.2%

Financials 81 10.2% 5.3%

Healthcare 41 12.3% 1.3%

Industrials 51 11.6% -8.6%

Information Technology 80 15.8% 2.1%

Materials 76 18.8% -4.6%

Telecommunications 9 3.1% -3.9%

Utilities 35 3.7% -2.5% Total 500 100.0% -1.2% DJ US TOTAL MARKET # % % YTD SECTOR STOCKS WEIGHT RETURN Basic Materials 68 3.3% 0.0%

Consumer Goods 126 9.9% 3.2%

Consumer Services 199 11.4% 3.3%

Financials 257 16.4% 2.0%

Health Care 134 12.4% -7.8%

Industrials 249 12.8% 5.7%

Oil & Gas 96 10.8% -6.9%

Technology 171 16.4% -3.6%


Utilities 75 3.9% -1.5% Total 1,396 100.0% -0.7% Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. YTD returns reflect US dollar price performance only from 31/12/2009 to 30/07/2010. Index weights captured from Bloomberg on 18/08/2010. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Continued…



Automobiles & Transportation Equipment, 10.3%

Banks, 5.8%

Commercial & Wholesale Trade, 5%

Construction & Materials, 7.1%

Electric Appliances & Precision Instruments, 15.8%

Electric Power & Gas, 0.7%

Energy Resources, 11%

Financials Ex Banks, 4.7%

Foods, 3.4%

IT & Services Others, 4.6%

Machinery, 0.6%

Pharmaceutical, 4.3%

Raw Materials & Chemicals, 5.1%

Real Estate, 2.3%

Retail Trade, 3.6%

Steel & Nonferrous, 9.8%

Transportation & Logistics, 5.9%

Figure 88 (continued): Sector weights and YTD performance Europe STOXX 600 EURO STOXX # % % YTD # % % YTD SECTOR STOCKS WEIGHT RETURN STOCKS WEIGHT RETURN Automobiles & Parts 14 2.0% 0.1% 13 4.2% -0.3%

Banks 54 15.9% -8.9% 37 16.1% -18.3%

Basic Resources 30 5.2% -9.7% 13 2.2% -19.7%

Chemicals 21 4.0% -10.3% 15 6.8% -10.6%

Construction & Materials 26 2.5% -17.2% 19 3.8% -21.5%

Financial Services 31 1.4% -8.1% 11 1.1% -14.5%

Food & Beverage 27 7.5% -1.7% 14 5.4% -5.6%

Health Care 34 9.6% -11.5% 14 3.9% -18.2%

Industrial Goods & Services 93 9.0% 3.2% 41 9.5% -1.7%

Insurance 33 5.5% -9.2% 15 6.9% -12.9%

Media 28 2.2% -2.1% 16 2.6% -9.8%

Oil & Gas 38 9.1% -18.8% 16 7.2% -18.9%

Personal & Household Goods 29 5.1% 1.7% 12 4.2% 2.2%

Real Estate 19 1.1% -8.2% 10 1.2% -9.8%

Retail 24 3.5% -3.4% 11 3.1% -0.5%

Technology 26 3.0% -4.5% 16 4.3% -11.4%

Telecommunications 20 6.5% -9.0% 11 7.5% -16.0%

Travel & Leisure 22 1.2% 1.8% 8 1.0% -2.7%

Utilities 31 5.7% -19.3% 21 8.9% -23.6% Total 600 100.0% -8.4% 313 100.0% -13.3% Total 601 100.0% -8.1% 315 100.0% -11.3% -11.3%

MSCI EUROPE # % % YTD SECTOR STOCKS WEIGHT RETURN Consumer Discretionary 63 8.1% 2.5%

Consumer Staples 38 12.5% -2.7%

Energy 23 10.2% -18.2%

Financials 106 23.8% -8.9%

Healthcare 31 10.1% -13.3%

Industrials 83 10.3% -0.8%

Information Technology 18 2.8% -4.7%

Materials 49 9.5% -10.1%


Utilities 28 5.7% -19.5% Total 461 100.0% -8.7%

Japan TOPIX-17 # % % YTD SECTOR STOCKS WEIGHT RETURN Automobiles & Transportation Equipment 73 10.3% -8.5%

Banks 83 5.8% 0.9%

Commercial & Wholesale Trade 139 5.0% -3.9%

Construction & Materials 163 7.1% 2.7%

Electric Appliances & Precision Instruments 180 15.8% 1.7%

Electric Power & Gas 17 0.7% 7.7%

Energy Resources 16 11.0% -1.3%

Financials Ex Banks 50 4.7% -8.9%

Foods 70 3.4% -3.5%

IT & Services Others 237 4.6% 7.1%

Machinery 122 0.6% 0.5%

Pharmaceutical 33 4.3% 0.0%

Raw Materials & Chemicals 172 5.1% 2.1%

Real Estate 44 2.3% -8.9%

Retail Trade 145 3.6% 6.3%

Steel & Nonferrous 59 9.8% -7.2%

Transportation & Logistics 66 5.9% 8.0% Total 1,669 100.0% 0.0% Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. YTD returns reflect US dollar price performance only from 31/12/2009 to 30/07/2010. Index weights captured from Bloomberg on 18/08/2010. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



Figure 89: Macro asset allocation strategies ETFs can be used to implement the country and regional allocations suggested by strategists and analysts. # % % YTD MSCI WORLD STOCKS WEIGHT RETURN Australia 72 3.8% -7.1%

Austria 8 0.1% -11.4%

Belgium 13 0.4% -5.9%

Canada 100 5.0% 0.5%

Denmark 11 0.5% 13.9%

Finland 17 0.5% -10.1%

France 77 4.6% -14.0%

Germany 50 3.6% -8.9%

Greece 9 0.1% -33.8%

Hong Kong 40 1.2% 0.2%

Ireland 5 0.1% -15.6%

Israel 16 0.4% -12.3%

Italy 30 1.3% -17.5%

Japan 341 10.2% -0.7%

Netherlands 21 1.2% -6.2%

New Zealand 5 0.0% -9.9%

Norway 9 0.4% -11.7%

Portugal 9 0.1% -20.5%

Singapore 30 0.8% 4.9%

Spain 28 1.7% -20.2%

Sweden 32 1.4% 10.1%

Switzerland 37 3.6% -4.7%

United Kingdom 105 10.1% -5.8%

United States 593 48.8% -1.3% Total 1,658 100.0% -3.7% # % % YTD MSCI EUROPE STOCKS WEIGHT RETURN Austria 8 0.5% -11.4%

Belgium 13 1.5% -5.9%

Denmark 11 1.6% 13.9%

Finland 17 1.6% -10.1%

France 77 15.3% -14.0%

Germany 50 12.0% -8.9%

Greece 9 0.5% -33.8%

Ireland 5 0.4% -15.6%

Italy 30 4.5% -17.5%

Netherlands 21 4.0% -6.2%

Norway 9 1.2% -11.7%

Portugal 9 0.4% -20.5%

Spain 28 5.8% -20.2%

Sweden 32 4.6% 10.1%

Switzerland 37 12.2% -4.7%

United Kingdom 105 33.9% -5.8% Total 461 100.0% -8.7% # % % YTD MSCI GCC COUNTRIES STOCKS WEIGHT RETURN Bahrain 4 8.4% -24.0%

Kuwait 16 17.1% 8.9%

Oman 9 2.7% 2.3%

Qatar 14 7.1% 3.0%

Saudi Arabia 35 53.9% 2.4%

UAE 14 10.8% -12.2% Total 92 100.0% 2.4%

# % % YTD MSCI EMERGING MARKETS STOCKS WEIGHT RETURN Brazil 76 16.0% -5.0%

Chile 16 1.7% 13.7%

China 124 18.7% -3.7%

Colombia 8 0.9% 28.2%

Czech Republic 4 0.4% -5.1%

Egypt 10 0.5% -0.1%

Hungary 4 0.4% -11.7%

India 60 7.8% 2.2%

Indonesia 22 2.3% 20.3%

Malaysia 40 2.9% 13.8%

Mexico 21 4.3% 3.0%

Morocco 3 0.2% 4.8%

Peru 3 0.6% 11.1%

Philippines 12 0.5% 8.5%

Poland 22 1.5% -3.6%

Russia 28 6.4% -1.1%

South Africa 45 7.4% 5.4%

South Korea 99 13.3% 2.1%

Taiwan 118 11.0% -6.6%

Thailand 20 1.5% 15.8%

Turkey 20 1.7% 12.5% Total 755 100.0% 0.2% # % % YTD MSCI FRONTIER MARKETS STOCKS WEIGHT RETURN Argentina 6 3.0% 11.5%

Bahrain 4 11.3% -24.0%

Bangladesh 8 0.0% 6.7%

Bulgaria 2 0.2% -17.7%

Croatia 4 2.6% -11.8%

Estonia 2 0.4% 23.1%

Jordan 6 2.4% -13.7%

Kazakhstan 3 3.7% -22.1%

Kenya 7 1.9% 21.8%

Kuwait 16 22.9% 8.9%

Lebanon 6 2.6% -9.5%

Lithuania 1 0.2% -0.8%

Mauritius 3 1.0% -5.7%

Nigeria 9 6.9% 22.2%

Oman 9 3.6% 2.3%

Pakistan 13 3.5% 8.5%

Qatar 14 9.5% 3.0%

Romania 5 1.0% -5.7%

Serbia 2 0.2% -7.4%

Slovenia 5 3.2% -16.8%

Sri Lanka 5 0.6% 35.3%

Trinidad 2 1.0% -0.1%

Tunisia 4 0.5% 7.4%

UAE 14 14.5% -12.2%

Ukraine 10 0.3% 34.0%

Vietnam 14 2.9% -0.1% Total 174 100.0% 2.4%

Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. YTD returns reflect US dollar price performance only from 31/12/2009 to 30/07/2010. Index weights captured from Bloomberg on 18/08/2010. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



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Figure 90: Index performance (annual US dollar price performance) # YTD INDEX TICKER MEMBERS 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 JUL-10 MSCI World MXWO 1,658 14.2% 22.8% 23.6% -14.1% -17.8% -21.1% 30.8% 12.8% 7.6% 18.0% 7.1% -42.1% 27.0% -3.7%

MSCI Emerging Markets MXEF 755 -13.4% -27.5% 63.7% -31.8% -4.9% -8.0% 51.6% 22.4% 30.3% 29.2% 36.5% -54.5% 74.5% 0.2%

MSCI Europe MXEU 461 19.6% 27.8% 15.3% -9.9% -21.3% -20.0% 34.1% 18.0% 7.2% 29.8% 10.6% -47.9% 30.6% -8.7%

MSCI Pacific ex Japan MXPCJ 147 -32.7% -9.6% 39.3% -17.5% -12.2% -9.0% 41.3% 24.6% 10.2% 28.0% 27.2% -52.2% 65.9% -4.3%

MSCI Japan MXJP 341 -24.6% 4.0% 61.9% -28.9% -29.9% -10.7% 34.3% 15.0% 24.2% 5.1% -6.4% -29.6% 4.9% -0.7%

S&P 500 SPX 500 31.0% 26.7% 19.5% -10.1% -13.0% -23.4% 26.4% 9.0% 3.0% 13.6% 3.5% -38.5% 23.5% -1.2%

MSCI EAFE MXEA 965 0.2% 18.2% 25.3% -15.2% -22.6% -17.5% 35.3% 17.6% 10.9% 23.5% 8.6% -45.1% 27.7% -6.7%

S&P GSCI SPGCCI -18.4% -24.3% 46.2% 26.9% -31.5% 39.0% 10.8% 19.2% 39.1% 0.4% 40.7% -42.8% 50.3% 0.0%

DJ-UBS Commodity DJUBS -8.2% -30.5% 18.6% 24.2% -22.3% 23.9% 22.7% 7.6% 17.5% -2.7% 11.1% -36.6% 18.7% -3.5% Barclays Capital Global Aggregate Bond Index LEGATRUU 13,037 3.8% 13.7% -5.1% 3.1% 1.6% 16.5% 12.5% 9.1% -4.4% 6.6% 9.5% 4.8% 6.9% 3.1%

Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg. Number of constituents captured from Bloomberg on 18/08/2010.

% Accumulated US$ price return

% Accumulated US$ price return



Figure 91: Core/satellite applications

A broad market index. Exposure to diversified baskets of securities. Optimised core: sector, style or country indices.

Concentrated, focused ETFs. Sector and style. Individual countries and regions. Alternative asset class.


Figure 92: ETF portfolios

Sample portfolios are for illustrative purposes only and should not be construed as a recommendation to purchase or sell, or an offer to sell, or a solicitation of an offer to buy any security. Source: BlackRock.



Figure 93: Why use ETFs?

Transparency Investors can generally see the ETF composition at any given time.

Liquidity ETFs offer two sources of liquidity: - Traditional liquidity measured by secondary market trading volume. - The liquidity of the underlying assets via the creation and redemption process.

Diversification ETFs offer immediate exposure to a basket or group of securities for instant diversification. Broad range of asset classes including equities, bonds, commodities, investment themes etc.

Flexibility ETFs are listed on exchanges and can be traded at any time the market is open. Pricing is continuous throughout the day.

Cost effectiveness ETFs offer a cost effective route to diversified market exposure. The average Total Expense Ratio (TER) for equity ETFs in Europe is 37 bps versus 87 bps per annum for the average

equity index tracking fund and 175 bps per annum for the average active equity fund1.to The average Total Expense Ratio (TER) for equity ETFs in the US is 34 bps versus 93 bps per annum for the average equity index tracking fund and 146 bps per annum for the average active equity fund1.

Securities lending ETF units and underlying assets can be lent out to potentially offset holding costs. 1. Source: Morningstar, March 2010.

Figure 94: How can ETFs be used?

Strategic Market exposure: Implement a wide variety of investment strategies using a broad range of market exposures. Directional views: Establish broad directional market position, use long & short trades to implement market view(s). Core satellite: Achieve strategic focus. Rebalancing: Adjust drift in a portfolio’s asset allocation or style. Completion: Add uncorrelated instruments and/or asset classes to strategy.

Tactical Interim beta: Maintain exposure to given market while searching for specific market opportunity. Cash management: Invest cash rapidly and cost effectively to gain desired market exposures. Derivatives alternative: Broad opportunity set of Delta 1 exposures with single line cash-based settlement. Exposure management: Shift portfolio emphasis by adjusting exposures (e.g. duration, credit). Thematic: Implement thematic exposures (e.g. dividends, alternatives).

Figure 95: ETFs can offer solutions for a range of portfolio strategies2

Portfolio construction Fill allocations required by investment strategy. Improve diversification. Gain exposure to size, style, yield, sector, geography.

Portfolio management Implement short-/long-term and/or neutral market views: - Hard to access asset classes, themes, sector, country. - Tactical Asset Allocations.

Strategic asset allocations

Establish core holdings. Establish single country or sector satellites.

Risk management Active risk budgeting. Combine ETFs in managing total portfolio volatility or duration adjustments in fixed income portfolios.

Cash equitisation Manage inflows, outflows, transitions. Obtain a wider exposure than offered by other Delta 1 products.

Exposure Exposures to markets or asset classes where one has no expertise or operational capabilities.

2 The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy

any security. There is no guarantee that any strategies discussed will be effective.



ETFs afford investors two forms of liquidity. The first is through trading the shares on a secondary basis on the exchange. The second is on a primary basis via the unique ‘creation’ process, whereby an AP purchases the underlying basket of securities in the local market and deposits the basket ‘in kind’ into the ETF, creating more shares in that ETF. The unique creation/redemption process means that the liquidity in the ETF is driven by the liquidity in the underlying securities. ETFs tend to trade at, or close to, their underlying NAVs. This is because there are usually arbitrageurs waiting to take advantage of a significant premium or discount relative to the underlying index. An arbitrageur will buy/sell the ETF and place an offsetting buy/sell transaction in the underlying basket of component securities. Divergence in the performance of an ETF, relative to the index it tracks, is possible. Differences tend to be caused by fund fees and expenses, tracking error when optimisation strategies are used to track the index, rebalancing due to corporate actions and index changes, or the dividend reinvestment policy of the fund. Figure 96: Typical ETF trading process

Today the ETF toolbox is well stocked with a wide array of products: Figure 97: The ETF toolbox EQUITY FIXED INCOME CASH CURRENCY Global Government

Corporate EONIA, SONIA Fed funds Capitalisation (large, mid,

small…) Credit Sectors Inflation ALTERNATIVES

Developed currencies Emerging market currencies Inverse/leveraged Strategy (carry, momentum...)

Broad markets High yield Emerging markets Mortgage backed COMMODITIES Countries Emerging markets

Hedge funds Carbon Volatility

Inverse/leveraged Broad (S&P GSCI, DJ-UBS, RICI,

CRB…) Styles Sub-indices (energy, livestock,

precious metals, industrial metals, agriculture...)

Individual commodities Based on physically held

assets (gold, silver, platinum, palladium…)

Based on futures Based on forwards

- Active - Dividend - Fundamental - Infrastructure - Real estate - Shariah - Thematic - Private equity - Value/growth

2,282 ETFs with 4,872 ETF listings 849 ETPs2 with 1,415 listings Total: 3,131 products with 6,287 listings

Inverse/leveraged 2 ETPs include Holding Company Depository Receipts (HOLDRs), Exchange Traded Commodities, Exchange Traded Currency Products, and Exchange Traded Notes, as at end July 2010. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



ETFs cover many well known blue-chip indices such as S&P 500, CAC, DAX, FTSE 100, Hang Seng, Nikkei etc. Recently there has been a proliferation of new indices from index providers which they hope will form the basis of new ETFs. Many of the new indices use diverse weighting methodologies, including market capitalisation, equal weight, price, dividend and other fundamental factors. As an example the new FTSE RAFI Index Series is weighted using four fundamental factors; total cash dividends, free cash flow, total sales and book equity value rather than traditional market capitalisation. WisdomTree has created dividend-weighted indices where the stock’s weight is based on either the amount of cash dividend or the dividend yield of the companies in each index. Infrastructure ETFs: The first Infrastructure ETF was launched in January 2007. Infrastructure indices provide diversified exposure to three infrastructure clusters: energy (oil and gas storage and transportation), transportation (airport services, highways and railroads, marine ports and services) and utilities (electric, gas, water, multi-utilities). Fixed Income ETFs: The first Fixed Income ETF was launched in Canada in November 2000. A broad array of government, corporate, credit, high yield, emerging market, inflation protected and money market fixed income products are available to investors within the flexibility of an ETF wrapper, allowing investors to implement income generating strategies, fund future liabilities, hedge inflation and enhance portfolio risk-adjusted returns. There are global, regional and single country fixed income ETFs with TERs ranging from 0.05% to 0.65%. Commodity ETFs: The first Commodity ETF was launched in Canada in March 2001. Commodities as an asset class typically exhibit low correlation to equity indices, and the advent of commodity ETFs allows investors to satisfy asset allocation and diversification requirements, hedge inflation or speculate on commodity indices such as the S&P GSCI. Trading commodity indices as a single exchange traded product avoids the need to manage futures rolls, provides investors with deep underlying liquidity pools, and allows investors who are restricted from using derivatives or other commodity vehicles to gain exposure in an equity vehicle. Shari’ah ETFs: The first Shari’ah compliant ETF was launched in January 2007. Shari’ah compliance means compliance with certain Shari’ah principles that are derived from the Quaran and other sources of Islamic law, as determined by Shari’ah scholars. Methodologies exclude representation in the index by shares issued by producers of alcohol and pork-related products, providers of conventional financial services and providers of entertainment services (e.g. hotels, casinos/gambling, cinema etc.). Tobacco manufacturers, defence and weapons companies, although not strictly forbidden under Shari’ah law, are also excluded. In addition to excluding companies from certain sectors, Shari’ah compliant indices also exclude companies that employ excessive leverage or generate excessive interest income. Private Equity ETFs: The first Private Equity ETF was launched in October 2006. Private Equity firms raise capital primarily from institutional investors such as pension funds, banks, insurance companies, endowments, family offices, funds of funds and foundations to invest in venture capital, buy-outs and special situations (distressed companies). Typically, private equity companies invest in high growth, start-up companies or acquire businesses where superior efficiencies could be achieved.

Real Estate ETFs: The first Real Estate ETF was launched in the United States in June 2000. The existing range of real estate ETFs include listed real estate companies and Real Estate Investment Trusts (REITs) which own and usually actively manage income-producing commercial real estate. REITs are typically required to pay out at least 90% of all taxable income, providing dividend income to investors, along with the potential for long term share price appreciation. There are several ETFs available allowing investors to gain global, regional or single country REIT exposure. Dividend ETFs: The first Dividend weighted ETF was launched in November 2003. Several ETF providers have structured ETFs by selecting and weighting the constituents based on dividend yield or absolute dividend payments. Some research suggests that dividend weighted indices generate higher cumulative returns with lower volatility than comparable standard market cap weighted indices over the long term. There are many ETFs providing dividend weighted global, regional, single country and emerging markets exposure with Total Expense Ratios (TERs) ranging from 0.20% to 0.88%. Fundamental ETFs: The first Fundamental factor weighted ETF was launched in May 2000. Fundamental factors such as sales, cash flow, book value, dividends, earnings, and employees, are increasingly being used to create new indices. It has been argued that traditional market cap weighted indices are systematically inefficient by overweighting overvalued stocks and underweighting undervalued stocks. Sector ETFs: The first Sector ETFs were launched in December 1998 covering nine US economic sectors allowing investors to gain US sector exposure or implement sector rotation strategies. Certain sectors outperform in particular stages of the economic cycle. Sector rotation strategies are designed to beat the market by rotating the investment into the sector which is expected to outperform in the given stage of the economic cycle. There are many ETFs providing global, regional, and single country sector exposure with TERs ranging from 0.15% to 0.99%. Inverse/Leveraged ETFs: The first Inverse or Leveraged ETF was launched in February 2005. Leveraged ETFs are designed to provide up to 300% daily upside performance, while the inverse range of ETFs provide one and two times daily reverse (short) index performance. These ETFs can be used to magnify returns, hedge portfolios and manage risk without the need for a margin account or margin calls. TERs for these ETFs range from 0.14% to 1.15%. Global ETFs: The first Global ETF was launched in August 1997 in New Zealand. Global ETFs allow investors to gain diversified exposure to broad developed markets such as MSCI World which tracks the performance of 23 developed countries. International diversification can minimise the impact of economic downturns within individual countries or regions and reduce overall risk. There are global ETFs with TERs ranging from 0.20% to 1.14%. Emerging Market ETFs: The first Emerging Market ETF was launched in March 1996. Emerging Market countries are typically characterised by rapid economic growth, volatility, immature institutions and political instability. ETFs that track global emerging market indices such as the MSCI Emerging Markets Index provide investors with diversified exposure to 22 EM countries. There are many ETFs providing global, regional, and single country EM exposure with TERs ranging from 0.05% to 1.50%.

Source: Various ETF Providers, Exchanges, Global ETF Research and Implementation Strategy Team, BlackRock, as at end February 2010.



Figure 98: Comparison of fixed income index trading characteristics

Barclays Capital Citigroup eb.rexx EuroMTS FTSE JPMorgan Markit iBoxx

Government Government Government Government Gilt Emerging Market Government

Aggregate Corporate Inflation-Linked Corporate

Corporate Asset Backed Asset Backed

Inflation-Linked

INDEX FAMILY

EXPOSURE INDEX CALCULATION PRICE SOURCE PRICE CONTRIBUTION

PRICE TYPE

Barclays Capital Aggregate Barclays Capital About 80% comes from Barclays Capital traders

Daily Bid prices (non-government bonds)

Mid prices (government bonds)

Government – term Barclays Capital Barclays Capital traders Daily Mid prices

Government – short treasury Barclays Capital About 80% comes from Barclays Capital traders

The rest comes from third party vendors Daily Mid prices

Corporate Barclays Capital About 80% comes from Barclays Capital traders Daily Bid prices

Inflation-linked Barclays Capital Barclays Capital traders Daily Mid prices

Inflation-linked world Barclays Capital

Euro government, US TIPS, UK linkers and Japanese linkers come from Barclays Capital. Prices for Australian linkers are taken from ABN Amro. Canadian linker prices are taken from RBC Dominion and Swedish linker prices are taken from PMI Exchange

Daily Mid prices

Citigroup Citigroup Individual Citigroup trader pricing Daily Bid prices (Japan mid prices)

eb.rexx Deutsche Börse Eurex Bonds Intraday 9:00 am - 5:00 pm CET Traded price data

EuroMTS EuroMTS MTS Markets Intraday 9:00 am - 5:30 pm CET Bid prices

FTSE FTSE Gilt-Edged Market Makers Association (GEMMA) via Reuters Daily Mid prices

JP Morgan JP Morgan JP Morgan traders Daily Bid prices

Markit iBoxx Covered International Index Company (IIC) iBoxx Consortium Intraday 8:00 am

- 4:30 pm GMT Bid prices

Government – liquid capped and corporate

International Index Company (IIC) iBoxx Consortium Intraday 9:00 am

- 5:15 pm CET Bid prices

$ Corporate International Index Company (IIC) iBoxx Consortium Intraday Bid prices

Source: Fixed Income Index Guide, BlackRock.



Figure 99: Fixed income exhibits low historical correlation with almost all asset classes potentially providing diversification benefits to a portfolio

Asset classes Global property1 Global equities2 Global bonds3 Cash4 Emerging markets5

Global property1 1.00 0.66 0.07 -0.06 0.60

Global equities2 0.66 1.00 -0.09 -0.04 0.57

Global bonds3 0.07 -0.09 1.00 0.03 -0.03

Cash4 -0.06 0.04 0.03 1.00 -0.06

Emerging markets5 0.60 0.57 -0.03 -0.06 1.00

1 FTSE EPRA/NAREIT Global Index. 2 MSCI World Index. 3 Barclays Capital Global Aggregate Bond Index. 4 LIBOR 3M Index. 5 MSCI Emerging Markets Index. Past performance is no guarantee of future results. Source: Bloomberg, Datastream, May 2001 to May 2008.

Shorting and hedging with ETFs6 ETFs can be sold short to hedge a portfolio of stocks, bonds, commodities or funds. This allows an investor to potentially preserve a portfolio while protecting it from overall market losses. In a market decline, profits on an ETF short position could offset some of the losses incurred by the portfolio. Options are available on most ETFs in the United States which can be used for a number of strategies. Securities lending revenue on ETFs can be attractive for investors who own ETF shares. The lending revenue that can be earned on ETFs, may at times and for some ETFs, more than cover the annual TER. Investors can also use inverse (short) and leverage inverse ETFs to implement hedges and short economic exposure. There are currently 76 inverse/inverse leveraged ETFs in the US and 101 inverse/inverse leveraged ETFs listed on exchanges outside the US. Short interest is often considered an indication of the level of scepticism in the market.

6 With short sales, the investor risks paying more for a security than the investor received

from the sale.

Short interest data is captured for US listed securities on the 15th of each month, or the next business day, and reflects the number of shares that have yet to be repurchased to give back to lenders. The higher the short interest, the more investors are expecting a downturn. Short positions fall in value as stocks rise, and vice versa. The rules on shorting ETFs on financial indices and the use of inverse and leveraged inverse ETFs on financial indices in the various markets are continually being updated as regulators react to market conditions and the actions of other regulators – so the position is quite fluid.



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Commodities in your portfolio Portfolio diversification: Commodity returns have historically displayed low correlation with equities or other asset classes. As equities and other traditional assets perform well, commodities have tended to underperform these asset classes. However, as other asset classes decreased in value, commodities have sometimes provided positive returns for investors. Commodities are often used to help reduce portfolio risk by adding diversification.

Potential portfolio protection: Historically, commodities are one of the few asset classes to have benefited from rising inflation. As demand for goods and services increases, prices of those goods and services usually also rise, as do the prices of the commodities used in their production. Because commodity prices tend to rise in periods of inflation, investing in commodities can potentially provide some portfolio protection against accelerating inflation.

In addition, commodities have often proved more resilient than other asset classes to geopolitical and macro-economic shocks. For example, political crises in emerging markets have sometimes tripped up stock markets but left the commodity market relatively unaffected. Indices are a convenient way to access a group of commodities. Indices can represent the asset class as a whole or a particular sub-sector, such as energy, agriculture or precious metals. Commodity indices differ in the rules used to gain exposure to the asset class. Does the index track futures prices or spot prices? How often is the index rebalanced? Are there minimum and maximum weightings for different sectors or individual commodities? Investors should be aware of these rules before investing in structured products linked to indices. This section describes the components and methodologies of some of the main commodity indices. Some of the key features are outlined below.

Figure 100: S&P GSCI USD TR Index vs MSCI World USD TR Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

Data as at end December 2009.

Source: Global ETF Research & Implementation Strategy Team, BlackRock, Bloomberg.

Why include commodities in your portfolio?

Strategic

A long-only passive investment in commodities can provide investors with significant portfolio benefits. Counter cyclical with stocks and bonds. Diversification. Macro Economic Hedge against rising growth. Potential for high equity-like returns.

Tactical Outlook for commodity investment returns can be both cyclically and secularly bullish. Severe capacity constraints due to lack of infrastructure investment. Significant benefits are expected to come from backwardation in the energy markets.

% Accumulated US$ Total Return



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S&P GSCI TRThomson Reuters/Jefferies CRB Index TRRogers International Commodity Index TRDJ-UBS Commodity TR

Figure 101: Commodity index performance comparison Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

Data as at end December 2009.

Source: Global ETF Research & Implementation Strategy Team, BlackRock, Bloomberg.

Figure 102: Types of commodity exposure

ETFs providing exposure to ‘Commodities’ can be based on different types of underlying investments/vehicles which can lead to significant difference in performance:

SHARES PHYSICAL COMMODITIES FUTURES

Price is based on the exchange traded share price of listed companies.

eg. Gold miners, steel product producers, coal miners, companies engaged in agriculture/farming activities.

Price is based on the traded price of the physical underlying commodity.

The commodity is typically stored in a vault.

eg. Gold, Silver, Platinum, Palladium.

Price is based on an index level which is derived from underlying futures contracts.

Typically used for exposures which cannot be physically stored or represent a basket of commodities.

eg. Agriculture, Energy, Industrial Metals, Livestock.

Source: Global ETF Research & Implementation Strategy Team, BlackRock.

INDEX # OF COMMODITIES

WEIGHTING METHOD

RECOMPOSITION FREQUENCY

S&P GSCI 24 World Production

Monthly

Rogers International Commodity Index

36 Discretion of Committee

Annual

Thomson Reuters/Jefferies CRB Index

19 Equal Weighted

Irregular

Dow Jones UBS Commodity Index

19 Liquidity and Production

Annual

% Accumulated US$ Total Return % Accumulated US$ Total Return



Energy, 70%

Livestock, 5%

Precious Metals, 4%

Industrial Metals, 8%

Agriculture, 13%

Energy, 39%

Livestock, 7%

Precious Metals, 7%


Agriculture, 34%

Energy, 44%

Livestock , 3%

Precious Metals, 7%


Agriculture, 32%

Energy, 31%

Livestock, 7%

Precious Metals, 13%


Agriculture, 31%

Figure 103: Commodity index comparison

S&P GOLDMAN SACHS COMMODITY INDEX

DOW JONES UBS COMMODITY INDEX

THOMSON REUTERS JEFFERIES CRB INDEX

ROGERS INTERNATIONAL COMMODITY INDEX (RICI)

THOMSON ROGERS DJ UBS REUTERS INTERNAT’L COMMODITY JEFFERIES COMMODITY S&P GSCI INDEX CRB INDEX (RICI) COMMODITY MEASURE (%) (%) (%) (%) Energy 70.38% 31.09% 39.00% 44.00% WTI Crude Oil $/barrel 35.95% 13.92% 23.00% 21.00%

Brent Crude Oil $/barrel 14.92% - - 14.00%

RBOB Gasoline $cents/gallon 4.67% 3.56% 5.00% 3.00%

Heating Oil $cents/gallon 4.63% 3.49% 5.00% 1.80%

GasOil $/metric ton 5.95% - - 1.20% Natural Gas $/mmBtu 4.27% 10.11% 6.00% 3.00% Livestock 5.08% 6.54% 7.00% 3.00% Live Cattle $cents/pound 2.77% 4.00% 6.00% 2.00%

Feeder Cattle $cents/pound 0.50% - - - Lean Hogs $cents/pound 1.82% 2.53% 1.00% 1.00% Precious Metals 3.68% 13.04% 7.00% 7.10% Gold $/troy oz 3.28% 9.74% 6.00% 3.00%

Silver $/troy oz 0.40% 3.30% 1.00% 2.00%

Palladium $/troy oz - - - 0.30% Platinum $/troy oz - - - 1.80% Industrial Metals 7.95% 18.25% 13.00% 14.00% Aluminium $/metric ton 2.51% 5.53% 6.00% 4.00%

Copper $/metric ton 3.48% 7.56% 6.00% 4.00%

Lead $/metric ton 0.44% - - 2.00%

Nickel $/metric ton 0.88% 2.77% 1.00% 1.00%

Tin $/metric ton - - - 1.00%

Zinc $/metric ton 0.65% 2.39% - 2.00%

THOMSON ROGERS DJ UBS REUTERS INTERNAT’L COMMODITY JEFFERIES COMMODITY S&P GSCI INDEX CRB INDEX (RICI) COMMODITY MEASURE (%) (%) (%) (%) Agriculture 12.91% 31.09% 34.00% 31.90% Wheat $cents/bushels 2.88% 5.71% 1.00% 6.00%

Kansas Wheat $cents/bushels 0.59% - - 1.00%

Corn $cents/bushels 3.17% 6.83% 6.00% 4.75%

Soybeans $cents/bushels 2.33% 7.93% 6.00% 3.35%

Soybean Oil $cents/pound - 3.08% - 2.00%

Soybean Meal $/short ton - - - 0.75%

Cotton $cents/pound 1.31% 2.21% 5.00% 4.20%

Sugar $cents/pound 1.55% 2.07% 5.00% 2.00%

Coffee $cents/pound 0.73% 3.26% 5.00% 2.00%

Cocoa $/metric ton 0.36% - 5.00% 1.00%

Orange Juice $cents/pound - - 1.00% 0.60%

Rubber JPY/kilogram - - - 1.00%

Lumber $/1k board fleet - - - 1.00%

Canola CAD/metric ton - - - 0.75%

Rice $/cwt - - - 0.50%

Oats $cents/bushels - - - 0.50%

Rapeseed EUR/metric ton - - - 0.25%

Azuki Beans JPY/bag - - - 0.15%

Greasy Wool AUD/kilogram - - - 0.10%

TOTAL 100.00% 100.00% 100.00% 100.00% Data as at: May-10 Jul-10 Jan-10 Jan-10

Source: Global ETF Research and Implementation Strategy Team, BlackRock, S&P, Dow Jones, Jefferies, RICI Handbook 2010.



Figure 104: Deciding on which product to use depends on many factors

CONSIDERATIONS QUESTIONS PRODUCTS

Transparency

Client service

Product choice

Liquidity

Portfolio management

What is my benchmark?

What are my regulatory guidelines?

What are my mandate constraints?

What are my counterparty risk guidelines?

What are my tracking risk guidelines?

How can I gain long and/or short exposure?

How can securities lending add value?

What is my time horizon?

What are the tax implications?

What are my liquidity requirements?

What costs are involved?

Portfolio trading

ETFs

ETNs

ETPs

Swaps

Futures

Options

Securitised products: certificates, warrants, equity linked notes, local access products

Source: Global ETF Research and Implementation Strategy Team, BlackRock.

Factors to consider when selecting an ETF Objectives: assess your financial goals. Strategy: look for the right ETF to complement your portfolio. Ensure you read the prospectus and other documentation published by the ETF provider prior to investing. Risks: the value of your investment may go up or down. Check the specific risks (i.e. political, economic and currency risks when investing in an ETF providing exposure to an emerging market, country or region) and tax implications. The index: even ETFs with very similar sounding names can be based on very different constituents. Index providers have different index methodologies which will determine the holdings, weights and rebalance frequency, which will result in different risk and reward characteristics. Understanding the index is an important step in the process. The structure: regulatory changes and innovations in structures have seen ETPs move beyond the conventional open-ended fund structure of an ETF. Additionally, open-ended funds can, in many jurisdictions, embrace the use of swaps and other derivatives, which may change the risk characteristics and may limit the product’s transparency compared to traditional physical ETFs, particularly in relation to the fund’s list of holdings. The size of the ETF in terms of AUM will often dictate how much certain investors can invest in an ETF. Total costs: the fund’s Total Expense Ratio (TER), not just the Management Expense Ratio (MER), is a major consideration when comparing costs between ETFs. Trading costs, tracking risk, registrations, trading currency, dividend withholding rates and securities lending within the fund and lending of the ETF should all be considered. Liquidity: ETFs afford investors two forms of liquidity. The first is through trading the shares on a secondary basis on-exchange. The second is on a primary basis via the unique ‘creation’ process, whereby an AP purchases the underlying basket of securities in the local market and deposits the basket ‘in kind’ into the ETF, creating more shares in that ETF. The unique creation/redemption process means that the liquidity in the ETF is driven by the liquidity in the underlying securities. Similar indices can have different liquidity profiles based on their index methodology. ETF provider: the type and amount of information provided on their ETFs, index construction and methodology, tax and index management knowledge, as well as the level and type of support provided to investors, intermediaries and brokers varies based on the size, scale and expertise of the provider.

Investment concerns ETFs possess risks related to the securities in their underlying indices. ETFs are subject to risks applicable to any investment in portfolios of common stocks or bonds, including that of generally lower prices and the chance that they may underperform more concentrated or actively managed portfolios. By targeting performance in line with indices, investors are also foregoing opportunities to outperform. ETFs are subject to ‘tracking error’ risks. Factors such as expenses, imperfect correlation between an ETF’s stocks and those in its underlying index and regulatory policies may cause an ETF’s return to deviate from its underlying index. Six major sources of tracking error are summarised below: Fees and expenses: expenses of all fund products reduce total

return. Although ETFs have the low expense ratios, fees will cause an ETF to underperform its index over time.

Premiums/discounts: on any date, the closing price of an ETF

may be at a premium or discount to its Net Asset Value (NAV) due to supply and demand factors. This will affect reported performance of the ETF versus its index.

Dividend reinvestment: some ETFs hold dividends in cash and

only pay them out to investors on a periodic basis. In contrast, some ETFs can reinvest dividends daily. A lag in dividend reinvestment can cause small underperformance in rising markets.

Optimised replication: many ETFs use computer optimisation

techniques to design portfolios to closely track the index while minimising transaction costs. Under this technique, the ETF omits or underweights some stocks (usually the less liquid or smaller-cap stocks). This technique, if properly used, should have only a minor effect on tracking.

Rebalancing: ETFs are required to make changes in the

composition of their portfolios when stocks are added to or dropped from the index. The timing, market impact, and transaction costs of the changes can affect performance.

Nonconcurrent trading hours: some ETFs trade in the United

States when their underlying markets are closed. For example, the Japanese market is closed while an ETF tracking the Japanese market is trading on NYSE Arca. Given increased correlation between markets, ETFs based on the Japanese market may appear to be at a premium prior to the start of the trading day in Japan when the United States’ market is up in anticipation that the Japanese market will rally. Similarly, on a down day in the United States, the ETFs on the Japanese market may appear to trade at a discount.



Many European investors prefer ETFs that are UCITS funds from a regulatory and dividend withholding point of view. Some European investors are only allowed to invest in UCITS funds. For European and Asian investors, dividend withholding may be higher when investing in US listed ETFs as they may suffer dividend withholding within the ETFs as well as on dividends paid out of the ETF. Basic ETF structures ETFs have distinctive features. Each ETF is designed to track a specific index. They provide access to investment styles, asset classes, markets, and different sectors. They are structured as open-end funds which are domiciled and registered in many countries around the world. The assets of ETFs are held by custodians in a ring fenced structure. Most ETFs purchase the underlying securities in the index with the majority fully replicating their underlying index, many have the capacity to employ optimisation and sampling techniques. These ETFs may exclude certain securities and deviate from their benchmark constituent weights, which could lead to tracking error. The open-end structure typically allows funds to lend stock, which may generate extra income. In addition, these funds can hold other securities and financial instruments, including cash and equivalents and futures. Dividends are typically paid out quarterly, semi-annually or annually, although some ETFs do reinvest dividends in the fund.

In Europe, a new approach is being used to create funds and ETFs which utilise a total return swap plus a basket of securities to comply with the diversification rules under Undertakings for Collective Investments in Transferable Securities (UCITS III) to deliver index performance rather than purchasing the underlying securities in the index. Investors who are expressing concerns over counterparty risk, transparency and liquidity when using structured products, swaps, certificates, and notes are showing a preference for ETFs where the structure is a fund, and often, more specifically for ETFs which purchase the underlying securities in the index. ETFs tend to trade at or close to the NAV of the underlying basket of shares. Arbitrageurs would take advantage of significant premium or discount relative to the underlying index. An arbitrageur would typically buy or sell the ETF and place an offsetting buy or sell transaction in the underlying basket of component stocks or futures. ETF providers have continued to expand their product ranges in more specialised areas to cater for the growing number of professional and retail investors using ETFs as advanced portfolio construction tools. The increasing availability of these highly-specialised ETFs across the full spectrum of equities, fixed-income and alternative investments now ensures that investors can use ETFs to instantly reallocate capital to take advantage of new investment opportunities as market conditions stabilise.

Figure 105: New asset classes will continue to squeeze the traditional core of actively managed funds

Source: BCG Global Asset Management 2009, ‘Conquering the Crisis’, July 2009, Projections 2008–2012.



Figure 106: US ETF launches in 2010 TICKER REGION/ LAUNCH ETF NAME (BB) COUNTRY DATE July 2010 Global X Brazil Financials ETF BRAF US US 29-Jul-10 Market Vectors Emerging Markets Local Currency Bond ETF EMLC US US 23-Jul-10

Global X Lithium ETF LIT US US 23-Jul-10

WCM / BNY Mellon Focused Growth ADR ETF AADR US US 21-Jul-10 iShares MSCI ACWI ex US Consumer Discretionary Sector Index Fund AXDI US US 16-Jul-10 iShares MSCI ACWI ex US Consumer Staples Sector Index Fund AXSL US US 16-Jul-10 iShares MSCI ACWI ex US Energy Sector Index Fund AXEN US US 16-Jul-10 iShares MSCI ACWI ex US Health Care Sector Index Fund AXHE US US 16-Jul-10 iShares MSCI ACWI ex US Industrials Sector Index Fund AXID US US 16-Jul-10 iShares MSCI ACWI ex US Information Technology Sector Index Fund AXIT US US 16-Jul-10 iShares MSCI ACWI ex US Materials Sector Index Fund AXMT US US 16-Jul-10 iShares MSCI ACWI ex US Telecommunication Services Sector Index Fund AXTE US US 16-Jul-10 iShares MSCI ACWI ex US Utilities Sector Index Fund AXUT US US 16-Jul-10

Direxion Daily Natural Gas Related Bull 2X Shares FCGL US US 14-Jul-10

Direxion Daily Natural Gas Related Bear 2X SharesFCGS US US 14-Jul-10

Direxion Daily Retail Bull 2X Shares RETL US US 14-Jul-10

Direxion Daily Retail Bear 2x Shares RETS US US 14-Jul-10

Mars Hill Global Relative Value ETF GRV US US 09-Jul-10

Global X Brazil Consumer ETF BRAQ US US 08-Jul-10 Emerging Global Shares INDXX India Small Cap Fund SCIN US US 07-Jul-10 June 2010 Global X Brazil Mid Cap ET BRAZ US US 22-Jun-10

Claymore Shipping ETF SEA US US 11-Jun-10

Claymore BulletShares 2011 Corporate Bond ETF BSCB US US 07-Jun-10

Claymore BulletShares 2012 Corporate Bond ETF BSCC US US 07-Jun-10

Claymore BulletShares 2013 Corporate Bond ETF BSCD US US 07-Jun-10

Claymore BulletShares 2014 Corporate Bond ETF BSCE US US 07-Jun-10

Claymore BulletShares 2015 Corporate Bond ETF BSCF US US 07-Jun-10

Claymore BulletShares 2016 Corporate Bond ETF BSCG US US 07-Jun-10

Claymore BulletShares 2017 Corporate Bond ETF BSCH US US 07-Jun-10 PowerShares International Corporate Bond Portfolio PICB US US 03-Jun-10 May 2010 iShares MSCI Poland Investable Market Index Fund EPOL US US 26-May-10 SPDR Barclays Capital International Corporate Bond ETF IBND US US 19-May-10 ESG Shares North America Sustainability Index ETF NASI US US 19-May-10

IQ Taiwan Small Cap ETF TWON US US 19-May-10 SPDR Nuveen Barclays Capital Build America Bond ETF BABS US US 13-May-10

One Fund ONEF US US 11-May-10

iShares MSCI USA Index Fund EUSA US US 07-May-10 iShares MSCI Ireland Capped Investable Market Index Fund EIRL US US 07-May-10 iShares MSCI Indonesia Investable Market Index Fund EIDO US US 07-May-10 April 2010 ProShares Ultra MSCI Europe UPV US US 29-Apr-10

ProShares Ultra MSCI Pacific Ex-Japan UXJ US US 29-Apr-10

ProShares Ultra MSCI Brazil UBR US US 29-Apr-10

ProShares Ultra MSCI Mexico Investable Market UMX US US 29-Apr-10

ProShares Short KBW Regional Banking KRS US US 22-Apr-10

ProShares Ultra KBW Regional Banking KRU US US 22-Apr-10

Global X Silvers Miners ETF SIL US US 20-Apr-10 continued…

Figure 106 (continued): US ETF launches in 2010 TICKER REGION/ LAUNCH ETF NAME (BB) COUNTRY DATE April 2010 (continued) Global X Copper Miners ETF COPX US US 20-Apr-10

IQ South Korea Small-Cap ETF SKOR US US 14-Apr-10

First Trust BICK Index Fund BICK US US 13-Apr-10

JETS Contrarian Opportunities Index Fund JCO US US 09-Apr-10

ProShares Ultra Nasdaq Biotechnology BIB US US 08-Apr-10

ProShares Ultrashort Nasdaq Biotechnology BIS US US 08-Apr-10 Market Vectors Latin America Small-Cap Index ETF LATM US US 07-Apr-10 PowerShares S&P SmallCap Consumer Discretionary Portfolio XLYS US US 07-Apr-10 PowerShares S&P SmallCap Consumer Staples Portfolio XLPS US US 07-Apr-10

PowerShares S&P SmallCap Energy Portfolio XLES US US 07-Apr-10

PowerShares S&P SmallCap Financials Portfolio XLFS US US 07-Apr-10

PowerShares S&P SmallCap Health Care Portfolio XLVS US US 07-Apr-10

PowerShares S&P SmallCap Industrials Portfolio XLIS US US 07-Apr-10 PowerShares S&P SmallCap Information Technology Portfolio XLKS US US 07-Apr-10

PowerShares S&P SmallCap Materials Portfolio XLBS US US 07-Apr-10

PowerShares S&P SmallCap Utilities Portfolio XLUS US US 07-Apr-10

GlobalShares FTSE All-World ex US Fund GSO US US 06-Apr-10 GlobalShares FTSE All-Cap Asia Pacific ex Japan Fund GSZ US US 06-Apr-10

GlobalShares FTSE All-World Fund GSW US US 06-Apr-10 March 2010 IQ Canada Small Cap ETF CNDA US US 23-Mar-10

IQ Australian Small Cap ETF KROO US US 23-Mar-10

ProShares Short Real Estate REK US US 18-Mar-10

ProShares Short Basic Materials SBM US US 18-Mar-10

ProShares Short FTSE/Xinhua China 25 YXI US US 18-Mar-10

First Trust ISE Global Platinum Index Fund PLTM US US 12-Mar-10

First Trust ISE Global Copper Index Fund CU US US 12-Mar-10

SPDR S&P Russia ETF RBL US US 11-Mar-10

Direxion Daily Semiconductors Bear 3x Shares SOXS US US 11-Mar-10

Direxion Daily India Bear 2x Shares INDZ US US 11-Mar-10

Direxion Daily BRIC Bear 2x Shares BRIS US US 11-Mar-10

Direxion Daily Semiconductors Bull 3x Shares SOXL US US 11-Mar-10

Direxion Daily India Bull 2x Shares INDL US US 11-Mar-10

Direxion Daily BRIC Bull 2x Shares BRIL US US 11-Mar-10

Wilshire US REIT ETF WREI US US 09-Mar-10

Wilshire US 4500 Completion ETF WXSP US US 09-Mar-10

Wilshire 5000 Total Market ETF WFVK US US 09-Mar-10 February 2010 Direxion Daily 2 Year Treasury Bull 3x TWOL US US 25-Feb-10

Direxion Daily 2 Year Treasury Bear 3x TWOZ US US 25-Feb-10

Emerging Global Shares INDXX Brazil BRXX US US 24-Feb-10

PowerShares CEF Income Composite Portfolio PCEF US US 19-Feb-10

Market Vectors Egypt Index ETF EGPT US US 18-Feb-10 Emerging Global Shares INDXX China Infrastructure Index Fund CHXX US US 17-Feb-10

GlobalShares FTSE Developed Countries ex US GSD US US 12-Feb-10

Kotak Nifty 50 KONIFTY IN India 11-Feb-10

ProShares UltraPro Short Russell2000 SRTY US US 11-Feb-10

ProShares UltraPro Short QQQ SQQQ US US 11-Feb-10

ProShares UltraPro Short Mid400 SMDD US US 11-Feb-10

ProShares UltraPro Short Dow30 SDOW US US 11-Feb-10

ProShares UltraPro QQQ TQQQ US US 11-Feb-10

ProShares UltraPro Russell2000 URTY US US 11-Feb-10

ProShares UltraPro MidCap400 UMDD US US 11-Feb-10

ProShares UltraPro Dow30 UDOW US US 11-Feb-10 PIMCO Short Term Municipal Bond Strategy Fund SMMU US US 03-Feb-10 January 2010 Grail McDonnell Intermediate Municipal Bond ETF GMMB US US 29-Jan-10

continued…



Figure 106 (continued…): US ETF launches in 2010 TICKER REGION/ LAUNCH ETF NAME (BB) COUNTRY DATE January 2010 (continued) Grail McDonnell Core Taxable Bond Fund ETF GMTB US US 29-Jan-10 Grail McDonnell Intermediate Municipal Bond ETF GMMB US US 29-Jan-10

Grail McDonnell Core Taxable Bond Fund ETF GMTB US US 29-Jan-10

iShares MSCI ACWI ex US Financials Index Fund AXFN US US 22-Jan-10 iShares MSCI Emerging Markets Finanical Sector Index Fund EMFN US US 22-Jan-10 iShares MSCI Emerging Markets Materials Sector Index Fund EMMT US US 22-Jan-10

iShares MSCI Europe Financial Sector Index Fund EUFN US US 22-Jan-10

iShares MSCI Far East Financial Sector Index Fund FEFN US US 22-Jan-10

ProShares Ultra 20+ Year Treasury UBT US US 21-Jan-10

ProShares Ultra 7-10 Year Treasury UST US US 21-Jan-10 Jefferies TR/J CRB Wildcatters Exploration & Production Equity ETF WCAT US US 20-Jan-10

Global X China Materials ETF CHIM US US 14-Jan-10

Schwab International Small-Cap Equity SCHC US US 14-Jan-10

Schwab Emerging Markets Equity ETF SCHE US US 14-Jan-10

iShares 2017 S&P AMT-Free Municipal Series MUAF US US 08-Jan-10

iShares 2016 S&P AMT-Free Municipal Series MUAE US US 08-Jan-10

iShares 2015 S&P AMT-Free Municipal Series MUAD US US 08-Jan-10

iShares 2014 S&P AMT-Free Municipal Series MUAC US US 08-Jan-10

iShares 2013 S&P AMT-Free Municipal Series MUAB US US 08-Jan-10

iShares 2012 S&P AMT-Free Municipal Series MUAA US US 08-Jan-10

Source: Various ETF Providers, Exchanges, Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Figure 107: US ETP launches in 2010 TICKER REGION/ LAUNCH ETP NAME (BB) COUNTRY DATE July 2010 Barclays ETN+ Inverse S&P 500 VIX Short-Term Futures ETN XXV US US 19-Jul-10 db June 2010 PowerShares DB 3x Long 25+ Year Treasury Bond ETN LBND US US 30-Jun-10 PowerShares DB 3x Short 25+ Year Treasury Bond ETN SBND US US 30-Jun-10

Teucrium Corn Fund CORN US US 09-Jun-10 United States Brent Oil Fund LP BNO US US 02-Jun-10 April 2010 Credit Suisse Cushing 30 MLP Index ETN MLPN US US 14-Apr-10 February 2010 Credit Suisse Long/Short Liquid Index ETN CSLS US US 22-Feb-10 January 2010 ETFS Physical Platinum Shares PPLT US US 08-Jan-10

ETFS Physical Palladium Shares PALL US US 08-Jan-10

Source: Various ETP Providers, Exchanges, Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.



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Call 1-800-iShares to request a prospectus, which includes investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing. Investing involves risk, including possible loss of principal. Diversification may not protect against market risk. There are special risks associated with margin investing. As with stocks, you may be called upon to deposit additional cash or securities if your account equity, including that which is attributable to ETFs, declines. In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Securities focusing on a single country and narrowly focused investments may be subject to higher volatility. Bonds and bond funds will decrease in value as interest rates rise. An investment in the fund(s) is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. TIPS can provide investors a hedge against inflation, as the inflation adjustment feature helps preserve the purchasing power of the investment. Because of this inflation adjustment feature, inflation protected bonds typically have lower yields than conventional fixed rate bonds and will likely decline in price during periods of deflation, which could result in losses. Government backing applies only to government issued securities, not iShares exchange traded funds. Although market makers will generally take advantage of differences between the NAV and the trading price of ETF shares through arbitrage opportunities, there is no guarantee that they will do so. There is no guarantee that there will be borrower demand for shares of the iShares Funds, or that securities lending will generate any level of income. Distributions paid out of the Fund's net investment income, including income from securities lending, if any, are taxable to investors as ordinary income. The iShares Funds ("Funds") that are registered with the US Securities and Exchange Commission under the Investment Company Act of 1940 are distributed in the US by SEI Investments Distribution Co. (SEI). BlackRock Fund Advisors (BFA) serves as the investment advisor to the Funds. BFA is a subsidiary of BlackRock Institutional Trust Company, N.A., a subsidiary of BlackRock, Inc., none of which is affiliated with SEI. This material does not constitute an offer or solicitation to sell or a solicitation of an offer to buy any shares of any Fund (nor shall any such shares be offered or sold to any person) in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities law of that jurisdiction. The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., Dow Jones & Company, Inc., European Public Real Estate Association ("EPRA®"), FTSE International Limited ("FTSE"), FTSE/Xinhua Index Limited ("FXI"), iBoxx®, JPMorgan Chase & Co., MSCI Inc., Morningstar Inc., The NASDAQ OMX Group, Inc., National Association of Real Estate Investment Trusts ("NAREIT"), New York Stock Exchange, Inc., Russell Investment Group, or Standard & Poor's, nor are they sponsored, endorsed, or issued by Barclays Capital. None of these companies make any representation regarding the advisability of investing in the Funds. Neither SEI, nor BlackRock or any of its affiliates, are affiliated with the companies listed above. FXI does not make any warranty regarding the FTSE/Xinhua Index. All rights in the FTSE/Xinhua Index vest in FXI. "FTSE" is a trade- and servicemark of London Stock Exchange and The Financial Times Limited; "Xinhua" is a trade- and servicemark of Xinhua Financial Network Limited. The annual management fees of exchange traded funds may be substantially less than those of most mutual funds. Buying and selling shares of ETFs will result in brokerage commissions, but the savings from lower annual fees can help offset these costs. Shares of the exchange traded funds may be sold throughout the day on the exchange through any brokerage account. However, shares may only be redeemed directly from a Fund by Authorized Participants, in very large creation/redemption units. Information on funds and securities is provided strictly for illustrative purposes and should not be deemed an offer to sell or a solicitation of an offer to buy shares of any funds or securities that are described in this report. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective. The information provided is not intended to be a complete analysis of every material fact respecting any strategy. The examples presented do not take into consideration commissions, tax implications, or other transactions costs, which may significantly affect the economic consequences of a given strategy. The information provided is not intended to be tax advice. Investors should be urged to consult their tax professionals or financial advisers for more information regarding their specific tax situations. Neither BlackRock nor SEI provides investment or tax advice. This document is an independent market commentary document based on publicly available information and is produced by the ETF Research & Implementation Strategy team. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events, or a guarantee of future results. This document does not provide investment advice and the information contained within should not be relied upon in assessing whether or not to invest in the products mentioned. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The securities discussed in this commentary may not be suitable for all investors. The trademarks and service marks contained herein are the property of their respective owners. Third-party data providers make no warranties or representations of any kind relating to the accuracy, completeness, or timeliness of the data they provide and shall not have liability for any damages of any kind relating to such data. © 2010 BlackRock Advisors (UK) Limited. All rights reserved. iShares® is a registered trademark of BlackRock Institutional Trust Company, N.A. All other trademarks, servicemarks or registered trademarks are the property of their respective owners. iS--3342-0810.

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ASIA/PACIFIC

BeijingBBllaacckkRRoocckk AAsssseett MMaannaaggeemmeenntt NNoorrtthh AAssiiaaLLiimmiitteedd –– CChhiinnaa RReepprreesseennttaattiivvee OOffffiicceSuite 1907, Excel Centre, No. 6 Wudinghou Street, Xi ChengDistrict, Beijing, 100140, China +86.10.6619.0558

BeijingBBllaacckkRRoocckk AAsssseett MMaannaaggeemmeenntt NNoorrtthh AAssiiaaLLiimmiitteedd –– CChhiinnaa RReepprreesseennttaattiivvee OOffffiicceeOffice 208-1, Winland International Finance Centre,No.7 Finance Street, Xi Cheng District,Beijing 100140 China +86.10.5833.2208

BrisbaneBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt ((AAuussttrraalliiaa)) LLiimmiitteeddLevel 2, Waterfront Place, 1 Eagle Street,Brisbane, QLD 4000, Australia+61.7.3234.7000

Hong KongBBllaacckkRRoocckk AAsssseett MMaannaaggeemmeenntt NNoorrtthh AAssiiaa LLiimmiitteedd 16/F Cheung Kong Centre, 2 Queens Road, Central Hong Kong, China 1072+852.3903.2601

MelbourneBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt ((AAuussttrraalliiaa)) LLiimmiitteeddLevel 18, 120 Collins Street, Melbourne, VIC 3000, Australia+61.3.9657.3000

SeoulBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt ((UUKK))LLiimmiitteedd -- SSeeoouull RReepprreesseennttaattiivvee OOffffiiccee23rd Floor, 84 Taepyungno 1-GA, Jung-Ga, Seoul, 100-768, Korea+82.2.751.0500

SingaporeBBllaacckkRRoocckk AAsssseett MMaannaaggeemmeenntt SSoouutthheeaasstt AAssiiaa LLiimmiitteedd 23 Church Street, #13-08 Capital Square,Singapore, 04981, Singapore+65.6579.7000

SingaporeBBllaacckkRRoocckk AAsssseett MMaannaaggeemmeenntt SSoouutthheeaasstt AAssiiaa LLiimmiitteedd #29-01 SGX Centre II, 4 Shenton Way,Singapore, 068807, +65.6411.3000

SydneyBBllaacckkRRoocckk AAsssseett MMaannaaggeemmeenntt AAuussttrraalliiaa LLiimmiitteeddLevel 43/44, Grosvenor Place, 225 George Street, Sydney, NSW 2000, Australia +61.2.9272.2200

SydneyBBllaacckkRRoocckk AAsssseett MMaannaaggeemmeenntt AAuussttrraalliiaa LLiimmiitteeddLevel 41, Governor Phillip Tower,1 Farrer Place, Sydney, NSW 2000, Australia +61.2.8223.6001

TaipaiBBllaacckkRRoocckk AAsssseett MMaannaaggeemmeenntt28th Floor, 95 Tun Hwa South Road,Section 2, Taipai 106+886.2.2326.1600

TokyoBBllaacckkRRoocckk AAsssseett MMaannaaggeemmeenntt JJaappaann LLiimmiitteeddMaranouchi Trust Main Tower 1-8-3 Marunouchi Chiyoda-ku, Tokyo, 100-8217, Japan +886.2.2326.1600

TokyoBBllaacckkRRoocckk AAsssseett MMaannaaggeemmeenntt JJaappaann LLiimmiitteedd Sapia Tower, 1-7-12 Marunouchi, Chiyoda-ku, Tokyo, 100-0005, Japan

West PerthBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt ((AAuussttrraalliiaa)) LLiimmiitteeddSuite 4, Level 3, 1292 Hay Street, W. Perth, WA 6005, Australia +61.8.9229.2800

AMERICAS (continued)

New YorkBBllaacckkRRoocckk IInnssttiittuuttiioonnaall TTrruusstt CCoommppaannyy,, NN..AA..40 East 52nd Street, New York, 10022, NY +1.212.810.5300

New YorkBBllaacckkRRoocckk IInnssttiittuuttiioonnaall TTrruusstt CCoommppaannyy,, NN..AASuite 4514, 200 Park Avenue, New York, 10166, NY +1.212.548.4365

Newport BeachBBllaacckkRRoocckk RReeaallttyy AAddvviissoorrss IInnccSuite 700, 4400 MacArthur Boulevard,Newport Beach, 92660, CA+1.949.623.0700

Palm BeachBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCCPlaza Center, 1st Floor, 249 Royal PalmWay, Palm Beach, 33480, FL +1.561.366.8349

PhiladelphiaBBllaacckkRRoocckk FFiinnaanncciiaall MMaannaaggeemmeenntt IInncc 16th Floor, 2929 Arch Street, Philadelphia, 19104, PA +1.215.349.9700

PhoenixBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCC Suite 295, 2525 East Camelback Road,Phoenix, 85016, Arizona +1.602.224.5487

PittsburghBBllaacckkRRoocckk FFiinnaanncciiaall MMaannaaggeemmeenntt IInncc19th Floor, One PNC Plaza, 249 Fifth Avenue, Pittsburgh, 15222 Pittsburgh +1.412.762.7147

Princeton Corporate CampusBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCC 800 Scudders Mill Road, Plainsboro, 08536, NJ +1.609.853.5600

Rancho CordovaBBllaacckkRRoocckk IInnssttiittuuttiioonnaall TTrruusstt CCoo NNAA10815 Gold Center Drive, Rancho Cordova, 95670, CA

San FranciscoBBllaacckkRRoocckk IInnssttiittuuttiioonnaall TTrruusstt CCoommppaannyy,, NN..AA..400 Howard Street, San Francisco, 94105 CA +1.415.670.2000

San FranciscoBBllaacckkRRoocckk IInnssttiittuuttiioonnaall TTrruusstt CCoommppaannyy,, NN..AA..45 Fremont Street, San Francisco 94105, CA +1.415.670.2000

SantiagoiiSShhaarreess CChhiillee IInnvveerrssiioonneess LLiimmiittaaddaaAlcantara 200, Piso 6, Las Condes,Santiago, 755-0159, Chile

Sao PauloBBllaacckkRRoocckk BBrraassiill GGeessttoorraa ddee IInnvveessttiimmeennttooss LLttdd 16th floor, Praca Professor Jose Lannes,16° andar - Ed Berrini 500, No 40-4/5 Andares,Sao Paulo, 04571-100, Brazil+55.11.5509.3397

SeattleBBllaacckkRRoocckk FFiinnaanncciiaall MMaannaaggeemmeenntt IInncc 601 Union Street, Seattle, 98101, WA +1.206.613.6700

St LouisBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCCSuite 200, Two City Place Drive, St. Louis, 63141, MO

St PetersburgBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCCSuite 302, 100 Second Avenue South, St. Petersburg, 33701, FL

StamfordBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCC11th Floor, 301 Tresser Boulevard,Stamford, 06904, CT

TorontoBBllaacckkRRoocckk AAsssseett MMaannaaggeemmeenntt CCaannaaddaa LLiimmiitteeddSuite 2500 -25th Floor, 161 Bay Street, Toronto, Ontario, M5J 2S1, Canada+1.416.643.4000

WashingtonBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCCSuite 1120, 1800 K Street, Washington, 20006, DC

WilmingtonBBllaacckkRRoocckk CCaappiittaall MMaannaaggeemmeenntt 100 Bellevue Parkway, Wilmington, 19809, DE +1.302.797.2000

EMEA (continued)

MadridBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt ((UUKK))LLiimmiitteedd,, SSuuccuurrssaall eenn EEssppaaññaaPlaza Pablo Ruiz Picasso, nº1, Torre Picasso, Planta 14ª, 28020-Madrid, Spain +34.91.788.9400

MilanBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt ((UUKK))LLiimmiitteedd -- MMiillaann BBrraanncchhVia Brera, Nº 3-5, Milan, 20121 Italy +39.02.915.971

LuxembourgBBllaacckkRRoocckk OOppeerraattiioonnss ((LLuuxxeemmbboouurrgg)) SS..àà rr..ll..6D Route de Treves, Senningerberg, L-2633, Luxembourg +352.34.20101

MunichBBllaacckkRRoocckk AAsssseett MMaannaaggeemmeennttDeutschland AGMax-Joseph-Strasse 6, Munich, D-80333, Germany+49.89.42729.5899

SwedenBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt ((UUKK))LLiimmiitteedd,, SSttoocckkhhoollmm FFiilliiaall Master Samuelsgatan 1, Box 609, Stockholm, 114 11, Sweden+46.8.613.8520

ParisBBllaacckkRRoocckk AAddvviissoorrss ((UUKK)) LLiimmiitteedd -- FFrreenncchh BBrraanncchhWashington Plaza, 42/44 rue Washington, Paris, 75008, France +33.1.5643.2900

PeterboroughBBllaacckkRRoocckk AAddvviissoorrss ((UUKK)) LLiimmiitteeddChurch Gate, New Road, Peterborough, PE1 1TT, UK+44.17.3335.3600

St HelierBBllaacckkRRoocckk JJeerrsseeyy IInntteerrnnaattiioonnaall HHoollddiinnggss LL..PP..Forum House, Greenville Street, St. Helier, JE1 0BR, Jersey+44.15.3460.0800

ViennaBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt ((UUKK))LLiimmiitteedd ((LLoonnddoonn)),, ZZuurriicchh BBrraanncchh Graben 19/9, Vienna, 1010, Austria +43.23.060.6070

ZurichBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt ((UUKK))LLiimmiitteedd ((LLoonnddoonn)),, ZZuurriicchh BBrraanncchh Claridenstrasse 25, Zurich, 8002, Switzerland +41.44.297.7373

WarsawBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt ((UUKK))LLiimmiitteedd ((ssppóółłkkaa zz ooggrraanniicczzoonn ooddppoowwiieeddzziiaallnnoo ccii )) OOddddzziiaałł ww PPoollssccee 2nd Floor, DAGO Centrum, Rondo Onz 1, Warsaw, 00-124, Poland+48.22.544.9265

EMEA

AmsterdamBBllaacckkRRoocckk AAddvviissoorrss ((UUKK)) LLiimmiitteedd –– DDuuttcchh BBrraanncchh17th Floor, Rembrandt Tower, Amstelplein 1, Amsterdam, 1096 HA, Netherlands, +31.20.549.5200

BrusselsBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt ((UUKK))LLiimmiitteedd,, BBrruusssseellss BBrraanncchh Regus Park Atrium, Rue des Colonies 11, Brussels, 1000, Belgium +32.2.517.6133

DouglasBBllaacckkRRoocckk ((IIssllee ooff MMaann)) LLiimmiitteedd3rd Floor, Atlantic House, 4-8 Circular Road, Douglas, IM1 1AG, Isle of Man +44.16.2466.2255

DubaiBBllaacckkRRoocckk AAddvviissoorrss ((UUKK)) LLiimmiitteedd DDuubbaaii BBrraanncchh6th Floor, DIFC, Gate Village, Building 10,Dubai, United Arab Emirates,+971.4.365.2986

EdinburghBBllaacckkRRoocckk ((IInntteerrnnaattiioonnaall)) IInnvveessttmmeenntt CCoommppaanniieess40 Torphichen Street, Edinburgh, EH3 8JB, UK +44.131.472.7200

FrankfurtBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt ((UUKK))LLiimmiitteedd -- FFrraannkkffuurrtt BBrraanncchhBockenheimer Landstrasse 2-4, Frankfurt, D-60306, Germany+69.5050.03111

GenevaBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt ((UUKK))LLiimmiitteedd ((LLoonnddoonn)),, ZZuurriicchh BBrraanncchh,, GGeenneevvaa OOffffiiccee2nd Floor, Rue de Contamines 18, Case postale 34671211 Genève Switzerland +41.22.703.1970

LondonBBllaacckkRRoocckk AAddvviissoorrss ((UUKK)) LLiimmiitteeddMurray House, 1 Royal Mint Court,London, EC3N 4HH, UK+44.20.7668.8000

LondonBBllaacckkRRoocckk AAddvviissoorrss ((UUKK)) LLiimmiitteedd33 King William Street, London, EC4R 9AS, UK +44.20.7743.3000

LondonBBllaacckkRRoocckk AAddvviissoorrss ((UUKK)) LLiimmiitteedd45 King William Street, London, EC4R 9AS, UK +44.20.7743.3000

AMERICAS

AtlantaBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCC Suite 750, 3455 Peachtree Road N.E., Atlanta, 30326, GA +1.404.237.1941

Bloomfield HillsBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCC Suite 100, 39533 Woodward Avenue,Bloomfield Hills, 48304, MI+1.248.988.8700

BostonBBllaacckkRRoocckk CCaappiittaall MMaannaaggeemmeenntt IInncc One Financial Center, Boston, 02111, MA +1.617.357.1200

CharlotteBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCCSuite 1045, 401 North Tryon Street,Charlotte, 28202, NC +1.704.350.8400

ChicagoBBllaacckkRRoocckk FFiinnaanncciiaall MMaannaaggeemmeenntt IInnccSuite 2900, 227 West Monroe Street,Chicago, 60606, IL +1.312.395.9300

CincinnatiBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCCSuite 2315, 425 Walnut Street, Cincinnati, 45202, OH +1.513.579.3600

DallasBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCC Suite 750, Premier Place, 5910 NorthCentral Expressway, Dallas, 75206, TX+1.214.346.7340

DurhamBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCC 2200 West Main Street, Durham, 27705, NC, +1.919.416.6860

Florham ParkBBllaacckkRRoocckk RReeaallttyy AAddvviissoorrss IInncc3rd Floor, 300 Campus Drive, Florham Park, 07932, NJ +1.973.264.2700

HoustonBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCCSuite 3310, 1 Houston Center, 1221 McKinney Street, Houston, 77010, TX+1.713.658.1200

JacksonvilleBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCCSuite 3650, 50 North Laura Street,Jacksonville, 32202, FL +1.904.634.6084

Jersey CityBBllaacckkRRoocckk IInnssttiittuuttiioonnaall TTrruusstt CCoo NNAASuite 1405, 525 Washington Boulevard,Jersey City, 07310, NJ +1.201.942.8737

La JollaBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCCSuite 200, 7825 Fay Avenue, La Jolla, 92037, CA +1.858.456.3627

Los AngelesBBllaacckkRRoocckk FFiinnaanncciiaall MMaannaaggeemmeenntt IInncc 37th Floor, 350 South Grand Avenue, Los Angeles, 90071, CA +1.213.613.3800

Mexico CityIImmppuullssoorraa yy PPrroommoottoorraa BBllaacckkRRoocckk MMeexxiiccoo,, SS..AA.. ddee CC..VVTorre Mayor, Paseo de la Reforma 505,Piso 30 Mexico City, 06500, Mexico+52.55.5241.4300

MiamiBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCCSuite 1820, 701 Brickell Avenue, Miami, 33131, FL +1.305.595.1126

MinneapolisBBllaacckkRRoocckk IInnvveessttmmeenntt MMaannaaggeemmeenntt LLLLCCExecutive Suite, 80 South Eighth Street,IDS Center, Minneapolis, 55402, MN+1.612.332.3223

QuebecBBllaacckkRRoocckk HHoollddiinnggss CCaannaaddaa LLiimmiitteeddSuite 1730, 1000 Sherbrooke Ouest,Montreal, Quebec, H3A 3G4, Canada+1.514.843.5128

New YorkBBllaacckkRRoocckk IInnssttiittuuttiioonnaall TTrruusstt CCoommppaannyy,, NN..AA..Park Avenue Plaza, 55 East 52nd Street,New York, 10055, NY+1.212.810.5300

Etfl Industry Review Jul10 Us

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