etf landscape industry highlights, february 2011...followed by vanguard with 66 etfs, assets of...

ETF Landscape Industry HighlightsFebruary 2011

FOR PROFESSIONAL INVESTORS. NOT FOR INVESTORS IN THE UNITED STATES OR CANADA.

Deborah Fuhr, Managing DirectorGlobal Head of ETF Research and Implementation StrategyPhone: +44 20 7668 4276 Email: [email protected]

2FOR PROFESSIONAL INVESTORS. NOT FOR INVESTORS IN THE UNITED STATES OR CANADA.

Table of contents

I. Current ETF and ETP landscape 3ETFs/ETPs listed globally 3Global ETF and ETP asset growth 6Global ETF and ETP providers 8ETFs/ETPs listed in the United States 20United States ETF and ETP asset growth 23ETFs/ETPs listed in Europe 44European ETF and ETP asset growth 47ETFs/ETPs listed in Asia Pacific (ex-Japan) 65ETFs/ETPs listed in Japan 72ETFs/ETPs listed in Latin America 76ETFs/ETPs listed in Canada 79Middle East and Africa ETF and ETP asset growth 83

II. Investment applications 85Product overview 85ETF/ETP toolbox 87How and why ETFs are used 90Growth in institutional users of ETFs 96Core-satellite 101Fixed income index trading characteristics 105Commodity index comparison 108Structures of ETFs and ETNs 113

III. Appendix – regulatory update 118

IV. ETF Landscape reports 133


ETFs and ETPs listed globally

At the end of February 2011, the global ETF industry had 2,557 ETFs with 5,802 listings and assets of US$1,367.4 Bn, from 140 providers on48 exchanges around the world. This compares to 2,091 ETFs with 3,998 listings and assets of US$1,001.9 Bn from 115 providers on 40 exchanges, at the end of February 2010.

We expect global AUM in ETFs and ETPs1 to increase by 20–30% annually over the next three years, taking the global ETF/ETP industry to approximately US$2 trillion in AUM by early 2012. Considering ETFs separately, AUM should reach US$2 trillion globally by the end of 2012, US$1 trillion in the United States in 2011 and US$500 billion in Europe in 2013.

Taking ETFs and ETPs together, United States AUM should reach US$2 trillion in 2013, with European AUM reaching US$500 billion in 2012.

Anniversaries• 29 January 2011 marked the 18th anniversary of ETFs in the United States.

• 9 March 2011 will mark the 21st anniversary of the first ETF globally, which listed in Canada in 1990.

• 11 April 2011 will mark the 11th anniversary of ETFs in Europe.

• 27 August 2011 will mark the 10th anniversary of ETFs in Australia.

Assets• YTD, assets have increased by 4.3% from US$1,311.3 Bn to US$1,367.4 Bn, which is less than the 5.6% increase in the MSCI World

Index in US dollar terms. This compares to a 3.3% decrease in assets over the same period in 2010.

• US$9.6 Bn of net new assets went into ETFs/ETPs in February 20112. US$3.3 Bn net inflows went into equity ETFs/ETPs, of which US$9.3 Bn went into ETFs/ETPs tracking developed market indices while ETFs/ETPs tracking emerging market indices saw netoutflows of US$6.0 Bn. Fixed income ETFs/ETPs saw net inflows of US$0.6 Bn, of which ETFs/ETPs providing high yield exposure sawUS$0.6 Bn net inflows while Government bond ETFs/ETPs saw net outflows of US$1.1 Bn. US$5.2 Bn net inflows went into ETFs/ETPs with commodity exposure, of which ETFs/ETPs with exposure to agricultural commodities saw US$1.8 Bn net inflows and ETFs/ETPs providing exposure to energy saw net inflows of US$1.0 Bn.

1. ETPs are products that have similarities to ETFs in the way they trade and settle but they do not use an open-end investment company 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.

2. Global flows approximated by combining United States and European flows.Note: Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, National Stock Exchange (NSX).


ETFs and ETPs listed globally (continued)

Assets (continued)• US$24.0 Bn of net new assets went into ETFs/ETPs in 2011 YTD1. US$16.6 Bn net inflows went into equity ETFs/ETPs, of which

US$25.7 Bn went into ETFs/ETPs tracking developed market indices while ETFs/ETPs tracking emerging market indices saw net outflows of US$9.1 Bn. Fixed income ETFs/ETPs saw net inflows of US$3.2 Bn, of which ETFs/ETPs providing high yield exposure sawUS$1.9 Bn net inflows while Government bond ETFs/ETPs saw net outflows of US$0.9 Bn. US$3.2 Bn net inflows went into ETFs/ETPs with commodity exposure, of which ETFs/ETPs with exposure to agricultural commodities saw US$2.8 Bn net inflows while ETFs/ETPs providing exposure to precious metals saw net outflows of US$3.4 Bn.

• US$24.0 Bn of net new assets went into ETFs/ETPs1 YTD compared to US$3.1 Bn net outflows over the same period in 2010.US$16.6 Bn net new asset inflows went into equity ETFs/ETPs YTD, compared to US$9.2 Bn net outflows over the same period in 2010. Net new asset flows into ETFs/ETPs tracking developed market equity indices were US$25.7 Bn YTD, compared to US$8.0 Bn net outflows over the same period in 2010 and ETFs/ETPs tracking emerging market indices saw US$9.1 Bn net outflows YTD, greater than the US$1.2 Bn net outflows in the same period in 2010. Fixed income ETF/ETP net new asset inflows were US$3.2 Bn YTD, less than the US$6.6 Bn net inflows over the same period in 2010 and net inflows into ETFs/ETPs with commodity exposure were US$3.2 Bn YTDcompared to net outflows of US$0.5 Bn in the same period in 2010.

ETFs• YTD, the number of ETFs have increased by 3.9% with 97 new ETFs launched. This compares to a 7.3% increase in the number of ETFs

over the same period in 2010, when 143 new ETFs launched.

• There are currently plans to launch 1,019 new ETFs compared to 838 at the end of February 2010.

• The top 100 ETFs, out of 2,557, account for 62.4% of global ETF AUM, while 1,567 ETFs have less than US$100.0 Mn in assets,1,271 ETFs have less than US$50.0 Mn in assets and 439 ETFs have less than US$10.0 Mn in assets.

Trading volume• In February 2011, the ETF average daily trading volume in US dollars increased by 27.5% to US$59.1 Bn compared to December 2010.

This compares to average daily trading volume of US$74.3 Bn in February 2010.

1. Global flows approximated by combining United States and European flows.Note: Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, National Stock Exchange (NSX).


ETFs and ETPs listed globally (continued)

ETF providers• Globally, iShares is the largest ETF provider in terms of both number of products and assets, 476 ETFs and US$593.6 Bn respectively,

reflecting 43.4% market share; State Street Global Advisors is second with 118 ETFs, assets of US$202.2 Bn, and 14.8% market share; followed by Vanguard with 66 ETFs, assets of US$157.7 Bn and 11.5% market share; as at end of February 2011.

• The top three ETF providers, out of 140, account for 69.7% of global ETF AUM. This compares to 71.1% out of 116 providers, at the end of February 2010.

• Four new providers have entered the industry in 2011, launching their first ETFs, while 37 firms plan to launch their first ETF in the future.

Exchanges• YTD, the number of exchanges with official listings has increased from 46 to 48.

Index providers• MSCI ranks first in terms of AUM and number of products tracking its benchmarks with assets of US$339.5 Bn and 400 ETFs, while

Standard & Poor’s (S&P) ranks second with US$322.0 Bn and 330 ETFs, followed by Barclays Capital with US$114.8 Bn and 86 ETFs.

Mutual funds• Globally, net sales of mutual funds (excluding ETFs) were minus US$132.4 Bn, while net sales of ETFs were positive US$170.4 Bn

during 2010 according to Strategic Insight.

ETPs• Additionally, there were 1,092 other ETPs with 1,781 listings and assets of US$175.3 Bn from 57 providers on 23 exchanges. This

compares to 630 ETPs with 921 listings and assets of US$150.3 Bn from 40 providers on 18 exchanges, at the end of February 2010.

ETFs and ETPs• Combined, there were 3,649 products with 7,583 listings, assets of US$1,542.7 Bn from 174 providers on 52 exchanges around the

world. This compares to 2,721 products with 4,919 listings, assets of US$1,152.2 Bn from 139 providers on 43 exchanges, at the end of February 2010.

Note: Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, National Stock Exchange (NSX).


Global ETF and ETP asset growth

Note: Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

1,092

2,557

$175.3

$48.9

$212.5

$1,101.2

$1,367.4Feb-11

1,065

2,460

$170.6

$45.7

$207.3

$1,053.8

$1,311.32010

739

1,944

$119.7

$25.6

$167.0

$841.6

$1,036.02009

615

1,595

$61.2

$10.0

$104.0

$596.4

$711.12008

371

1,170

$54.6

$6.3

$59.9

$729.9

$796.72007

170

713

$32.5

$3.4

$35.8

$526.5

$565.62006

63

461

$15.9

$1.2

$21.3

$389.6

$412.12005

21

336

$9.3

$0.5

$23.1

$286.3

$309.82004

18

282

$6.3

$0.3

$5.8

$205.9

$212.02003

17

280

$4.1

$0.1

$4.0

$137.5

$141.62002

17

202

$3.9

$0.0

$0.1

$104.7

$104.82001

142# ETPs

9233312121433# ETFs

$5.1$2.0ETP total

ETF commodity

$0.1ETF fixed income

$74.3$39.6$17.6$8.2$5.3$2.3$1.1$0.8ETF equity

$74.3$39.6$17.6$8.2$5.3$2.3$1.1$0.8ETF total20001999199819971996199519941993Assets (US$ Bn)

0

200

400

600

800

1,000

1,200

1,400

1,600Assets US$ Bn

0

500

1,000

1,500

2,000

2,500

3,000# products


ETFs/ETPs listed by region


0.0%

0.0%

5.7%

7.6%

5.1%

0.0%

-

0.0%

-

-

10.6%

0.0%

0.0%

6.5%

7.6%

5.1%

YTDchange

(%)

1

4

221

169

40.3

1

-

24

-

-

1,145.8

1

4

197

169

40.3

Feb-11

Canada

0.0%

0.0%

0.0%

0.0%

3.3%

0.0%

0.0%

0.0%

0.0%

4.0%

85.5%

0.0%

0.0%

0.0%

0.0%

-2.4%

YTDchange

(%)

6

20

357

356

20.3

4

12

328

327

18.0

13.7

3

10

29

29

2.3

Feb-11

Middle East& Africa

0.0%

0.0%

3.2%

0.0%

0.7%

100.0%

-

8.7%

-

-

179.4%

0.0%

0.0%

2.8%

0.0%

0.7%

YTDchange

(%)

3

4

390

26

10.2

2

-

25

-

-

394.6

3

4

365

26

10.2

Feb-11

Latin America

0.0%

4.6%

5.1%

7.6%

1.4%

0.0%

0.0%

0.0%

0.0%

-0.2%

15.9%

0.0%

5.1%

5.5%

8.5%

1.4%

YTDchange

(%)

13

68

350

240

55.4

5

15

26

23

1.4

928.5

13

62

324

217

54.0

Feb-11

Asia ex-Japan

50.0%

0.0%

0.9%

1.1%

0.8%

0.0%

0.0%

0.0%

0.0%

7.7%

9.6%

50.0%

0.0%

1.2%

1.3%

0.7%

YTDchange

(%)

3

9

113

90

32.9

2

4

29

9

0.4

159.4

3

7

84

81

32.4

Feb-11

Japan

4.3%

2.3%

4.1%

3.6%

5.2%

0.0%

0.0%

1.3%

2.7%

3.8%

43.4%

4.5%

2.6%

5.0%

4.1%

5.3%

YTDchange

(%)

240.0%24.0%52# exchanges

452.2%462.4%174# providers

5,0353.3%1,1173.8%7,583# listings

1,6513.3%1,1173.5%3,649# ETFs/ETPs

331.64.0%1,052.04.1%1,542.7Assets (US$ Bn)

Total

80.0%14.5%23# exchanges

94.8%221.8%57# providers

1,1517.0%1981.7%1,781# listings

5357.0%1982.5%1,092# ETPs

32.52.3%122.92.7%175.3Assets (US$ Bn)

ETPs

4,492.126.4%51,930.127.5%59,064.2ADV (US$ Mn)

230.0%24.3%48# exchanges

400.0%282.9%140# providers

3,8842.6%9194.4%5,802# listings

1,1162.6%9193.9%2,557# ETFs

299.14.3%929.14.3%1,367.4AUM (US$ Bn)

ETFs

Feb-11

YTDchange

(%)Feb-11

YTDchange

(%)Feb-11Metric

EuropeUnited StatesGlobal


Top 25 ETF providers around the world: ranked by AUM


$0.0

$0.0

$0.0

$0.6

$2.3

$0.1

$0.0

$0.0

$0.0

$0.1

$0.1

$0.1

$0.2

$0.5

$0.1

$0.1

$0.1

$0.9

$3.3

$3.2

$0.8

$1.0

$2.0

$24.3

$17.6

ADV (US$ Bn)

YTD changeFeb-11

0.1%3.0%$4.41.5%1211.5%$152.966Vanguard

0.0%1.7%$0.10.0%060.4%$5.629Claymore Investments

0.0%5.6%$0.30.0%010.4%$5.949EasyETF

0.1%19.5%$1.01.8%1160.4%$5.957Source Markets

0.0%10.0%$0.50.0%0160.4%$6.043First Trust Advisors

-0.1%-12.3%-$0.80.0%010.5%$6.023Daiwa Asset Management

0.0%-2.1%-$0.10.0%01740.5%$6.439Direxion Shares

0.0%4.5%$0.36.9%200.5%$6.931UBS Global Asset Management

0.0%4.6%$0.30.0%000.5%$6.917Nikko Asset Management

0.0%5.4%$0.40.0%050.5%$7.135ETFlab Investment

0.0%6.0%$0.411.8%290.6%$7.819HSBC/Hang Seng

0.0%10.6%$0.80.0%000.6%$7.992Amundi ETF

0.0%3.2%$0.30.0%000.7%$8.990Commerzbank

0.0%1.6%$0.22.3%1720.8%$10.145WisdomTree Investments

-0.1%-4.9%-$0.60.0%000.8%$11.27Zurich Cantonal Bank

0.0%-2.9%-$0.40.0%000.9%$11.91Bank of New York

0.0%0.2%$0.00.0%021.2%$15.754Credit Suisse Asset Management

-0.1%-3.6%-$0.60.0%001.2%$15.832Nomura Asset Management

-0.1%-4.0%-$0.80.0%0351.4%$19.229Van Eck Associates Corp

0.0%2.5%$0.50.0%0991.7%$22.1100ProShares

0.2%8.4%$3.60.0%0493.5%$46.4130PowerShares

0.0%1.8%$0.90.6%1123.7%$50.0180db x-trackers

0.0%2.2%$1.21.3%214.1%$54.5158Lyxor Asset Management

0.4%4.6%$8.72.7%33514.9%$199.3116State Street Global Advisors

-0.7%0.2%$1.10.2%11543.4%$579.7474iShares

% marketshare

%AUM

AUM(US$ Bn)

%ETFs

#ETFs

#planned

%total

AUM(US$ Bn)

#ETFsProvider


Global ETF assets by type of exposure


$59.1

$0.0

$0.0

$0.0

$1.4

$0.1

$3.1

$3.2

$0.3

$1.0

$1.0

$2.8

$9.1

$40.1

$54.4

ADV(US$ Bn)

0.6%$0.526.1%$82.8187Asia Pacific

6.6%$3.0133.6%$48.7143Commodities

4.3%

14.4%

12.2%

14.3%

6.2%

2.4%

2.5%

11.7%

8.0%

9.3%

-7.1%

8.4%

4.5%

%AUM

100.0%

0.1%

0.1%

0.2%

0.6%

15.0%

15.5%

2.1%

5.0%

9.7%

16.1%

41.5%

80.5%

%total

$56.197$1,367.42,557Total

$0.22$1.239Mixed

$0.22$1.717Currency

$0.34$2.319Alternative

$0.54$7.924Fixed income – cash (money market)

$4.819$204.6376Fixed income – all (ex-cash)

$5.223$212.5400Fixed income

$3.05$28.6136Global

$5.12$68.873Global (ex-US)

$11.313$132.6503Europe

-$16.821$220.8450Emerging markets

$44.110$567.3590North America

$47.254$1,101.01,939Equity

AUM(US$ Bn)

#ETFs

AUM(US$ Bn)

#ETFsExposure

YTD changeFeb-11

North America – equity 41.5%Emerging markets – equity 16.1%Fixed income – all (ex-cash) 15.0%Europe – equity 9.7%Asia Pacific – equity 6.1%Global (ex-US) – equity 5.0%Commodities 3.6%Global – equity 2.1%Fixed income – cash (money market) 0.6%Alternative 0.2%Currency 0.1%Mixed 0.1%


Global ETF/ETP net new assets by type of exposure

Note: Global ETF/ETP data approximated by combining United States and European data. NNA – Net New Assets. Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, National Stock Exchange (NSX).

continued…

Nov-10

Exposure# ETFs/ETPs

ADV(US$ Mn)

Assets (US$ Mn)

Equity 1,609 53,460.9 990,762.2 3,284.4 16,625.9 106,345.7 69,099.1Developed markets 1,368 45,413.1 816,215.9 9,284.3 25,743.4 64,233.6 34,594.3

North America 566 40,495.1 551,056 5,096 17,260 41,795 3,548Asia Pacific 88 760.4 36,363.8 260.2 656.0 4,922.6 4,487.8Europe 507 2,808.5 132,690.6 1,460.6 3,514.9 8,665.3 19,714.7Global 135 323.1 28,642.3 1,159.6 1,912.3 4,156.6 6,152.0Global (ex-US) 72 1,026.0 67,462.8 1,308.4 2,400.1 4,693.7 691.4

Emerging markets 241 8,047.9 174,546.3 (5,999.9) (9,117.5) 42,112.1 34,504.9Broad 69 4,804.2 106,265.6 (5,194.4) (10,302.3) 32,996.2 20,356.3 Regional 34 219.9 8,565.6 (157.5) (332.4) 1,235.2 2,179.5 Country 138 3,023.7 59,715.1 (648.0) 1,517.2 7,880.6 11,969.1

Brazil 19 1,061.0 16,493.5 (94.6) 1,111.3 1,280.3 3,356.8 Chile 2 23.3 907.8 (10.6) 5.0 528.1 50.1 China 34 662.0 12,347.7 (585.2) (1,273.1) (1,185.0) 3,054.0 Colombia 1 3.2 133.6 (21.1) (27.4) 158.2 5.3 Egypt 1 6.8 28.4 - 17.6 (0.2) (5.2) Hungary 1 0.0 17.5 0.1 (0.4) (0.6) (0.3) India 15 169.9 5,898.8 32.5 (60.8) 1,699.2 1,390.9 Indonesia 2 15.6 623.5 (44.2) 424.8 600.7 167.5 Kuwait 1 0.1 50.3 - - 14.6 14.5 Malaysia 2 39.2 1,056.9 (103.9) (50.8) 324.8 71.1 Mexico 5 173.2 1,533.5 (72.6) (197.1) 330.1 302.0 Peru 1 15.6 670.9 127.1 151.8 299.8 96.3 Philippines 1 0.8 21.8 4.4 7.9 16.0 - Poland 4 3.8 269.6 9.2 31.2 132.3 7.3 Russia 12 262.3 6,520.0 458.9 1,044.6 1,911.7 552.9 South Africa 7 28.8 961.5 (110.0) (23.1) 123.1 82.7 South Korea 7 279.1 5,528.7 16.4 317.4 825.7 922.9 Taiwan 7 182.0 4,224.2 (46.3) 254.5 (396.2) 1,231.4 Thailand 1 11.5 569.2 (24.0) (88.6) 280.0 169.2 Turkey 13 73.1 1,240.2 (206.2) (233.8) 516.6 318.0 UAE 0 0.0 0.0 - - (13.2) 7.2 Vietnam 2 12.4 617.5 22.1 106.6 357.2 151.8

Feb-11

YTD-11 NNA(US$ Mn)

2009 NNA(US$ Mn)

NNA (US$ Mn)

2010 NNA(US$ Mn)


Global ETF/ETP net new assets by type of exposure (continued)

Note: Global ETF/ETP data approximated by combining United States and European data. NNA – Net New Assets. Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, National Stock Exchange (NSX).

Exposure# ETFs/ETPs

ADV(US$ Mn)

Assets (US$ Mn)

Fixed income 351 3,162.4 198,907.0 588.4 3,174.3 37,700.6 54,255.3Broad 2 2.0 609.3 - 42.1 460.5 102.3 Active 6 8.9 985.1 42.3 132.9 798.7 48.8 Aggregate 11 204.3 29,205.6 72.9 123.0 5,039.0 8,216.7 Corporate 37 287.7 38,032.1 274.9 852.2 7,445.6 15,331.5 Convertible 1 10.2 716.7 75.2 161.4 271.7 212.0 Covered 8 3.6 1,072.8 20.9 28.0 360.3 438.4 Credit spreads 13 12.0 920.8 4.7 5.1 (25.3) (291.1) Government 190 2,049.5 65,253.6 (1,126.3) (931.6) 15,313.3 12,900.1 High yield 10 248.2 16,860.6 647.0 1,852.0 6,085.0 4,429.4 Inflation 25 139.7 26,539.2 84.6 330.5 738.1 12,505.6 Money market 17 110.2 7,251.3 362.7 633.6 (999.2) (4,518.2) Mortgage 4 20.0 4,073.2 60.7 94.7 500.6 1,305.2 Municipal 27 66.1 7,386.7 68.8 (149.5) 1,712.7 3,574.6

Commodities 617 5,149.5 181,623.4 5,233.3 3,219.5 22,694.2 46,209.7Broad 98 311 23,835 1,450 2,249.2 2,502.2 7,944Agriculture 133 370.8 14,934.5 1,752.3 2,794.0 (38.9) 3,221.8Energy 124 980.1 12,372.9 1,040.5 925.5 (443.1) 7,890.1Industrial metals 96 85.6 4,869.4 240.4 572.1 751.4 1,141.5Livestock 24 6.8 266.9 20.8 66.4 (22.4) 48.3Precious metals 142 3,395.6 125,344.5 729.4 (3,387.7) 19,945.1 25,963.8

Currency 126 264.2 6,902.2 124.9 334.9 (1,825.0) 4,345.6Alternative 33 579.4 4,252.3 266.2 460.6 4,062.4 2,157.2Mixed 32 8.2 1,184.6 86.8 145.2 477.2 240.3Total 2,768 62,625 1,383,632 9,584.0 23,960.5 169,455.2 176,307.2

Feb-11

YTD-11 NNA(US$ Mn)

2009 NNA(US$ Mn)

NNA (US$ Mn)

2010 NNA(US$ Mn)


Global inverse and leveraged ETF assets by type of exposure


-0.8%-$0.17039.2%$15.6199113Leveraged

-0.3%-2.0%-$0.1006.7%$2.62817North America

0.0%-32.1%$0.0000.0%$0.011Currency0.0%7.9%$0.0000.8%$0.31010Commodities0.6%6.1%$0.41117.7%$7.0158Fixed income0.0%-8.3%$0.0000.0%$0.022Asia Pacific0.0%-20.9%$0.0000.1%$0.022Global (ex-US)0.3%29.3%$0.1101.5%$0.61210Emerging markets0.4%14.7%$0.2403.9%$1.55622Europe-0.4%0.3%$0.01017.7%$7.06848North America0.3%3.9%$0.36023.2%$9.214084Equity

4.9%$0.87141.7%$16.6166103Leveraged inverse

3.6%$0.318619.1%$7.622983Inverse

0.0%100.0%$0.0000.0%$0.011Alternative0.0%65.1%$0.0000.0%$0.011Currency-0.4%-10.1%-$0.1003.2%$1.388Commodities

0.3%3.3%$0.41027.5%$10.97151North America-1.2%-15.6%-$0.4505.6%$2.28928Europe0.1%7.2%$0.1102.4%$0.91614Emerging markets0.0%25.0%$0.0000.1%$0.022Global (ex-US)

0.0%0.0%

-0.8%

0.0%0.0%0.2%0.0%-0.1%0.2%0.2%

0.0%

%total

32

00

7

001000

17

17

# totallistings

594

92

180

13

58317

128

167

# totallistings

0.1%$0.0035.7%$14.297Equity

2.3%

11.1%6.2%

100.0%-49.5%5.8%

16.1%-25.3%28.0%6.2%

2.7%

%AUM

100.0%

0.3%0.0%

0.0%0.0%6.0%0.1%0.2%1.1%5.0%

13.0%

%total

$0.97$39.7299Total

$0.00$0.16Fixed income$0.00$0.02Asia Pacific

$0.00$0.01Alternative$0.00$0.03Commodities$0.11$2.421Fixed income$0.00$0.01Asia Pacific$0.00$0.11Global (ex-US)$0.10$0.46Emerging markets$0.15$2.033Europe

$0.15$5.258Equity

AUM(US$ Bn)

#ETFs

AUM(US$ Bn)

#ETFsExposure

YTD changeFeb-11


Index providers worldwide: ranked by AUM


$59.1$1.7$0.0$0.0$0.0$0.0$0.0$0.0$0.1$0.2$0.0$0.2$0.2$0.0$0.1$0.0$0.1$0.1$0.1$0.7$0.1$0.7$3.9$0.4$2.1$1.3$1.4$6.7$2.4

$26.9$9.7

ADV(US$ Bn)

16.1%$0.900.5%$6.76Indxis9.1%$0.630.5%$7.117SSE1.9%$0.100.6%$7.813Grupo Bolsa

6.7%$5.6346.5%$88.3495Other$0.9$1.2$2.0$2.1$2.2$3.2$3.4$6.0

$7.8$8.6$8.8$9.3

$15.1$15.1$15.9$16.6$35.5$35.8$45.8$52.2$53.1$56.6$83.9

$114.8$322.0$339.5

4.3%$3.426.1%72Russell3.2%$3.628.4%86Barclays Capital6.9%$20.91523.5%330S&P0.5%$1.71024.8%400MSCI

-1.5%-$0.201.1%13Hang Seng3.3%$0.501.1%9Nikkei-4.1%-$0.721.2%43NYSE Euronext0.2%$0.011.2%54Topix

10.9%$3.562.6%51Deutsche Boerse12.9%$4.112.6%62NASDAQ OMX1.5%$0.733.4%115Markit9.8%$4.753.8%143Dow Jones9.0%$4.443.9%225STOXX3.0%$1.774.1%168FTSE

4.3%

13.1%10.4%15.9%8.9%

-15.6%10.8%-3.8%4.1%

2.3%1.4%-1.6%-1.6%

%AUM

100.0%

0.1%0.1%0.1%0.2%0.2%0.2%0.3%0.4%

0.6%0.6%0.6%0.7%

%total

$56.197$1,367.42,557Total

$0.1011Zacks$0.1010ISE$0.3015S-Network$0.2010Morningstar-$0.4016BNY Mellon$0.3036Intellidex-$0.1132CSI$0.2126Structured Solutions

$0.2018PC-Bond$0.1035WisdomTree-$0.1017SIX Swiss Exchange-$0.2029EuroMTS

AUM(US$ Bn)

#ETFs

AUM(US$ Bn)

#ETFsIndex provider

YTD changeFeb-11

MSCI 24.8%S&P 23.5%Barclays Capital 8.4%Russell 6.1%FTSE 4.1%STOXX 3.9%Dow Jones 3.8%Markit 3.4%NASDAQ OMX 2.6%Deutsche Boerse 2.6%Topix 1.2%NYSE Euronext 1.2%Nikkei 1.1%Hang Seng 1.1%EuroMTS 0.7%SIX Swiss Exchange 0.6%WisdomTree 0.6%PC-Bond 0.6%Grupo Bolsa 0.6%SSE 0.5%Indxis 0.5%Structured Solutions 0.4%CSI 0.3%Intellidex 0.2%BNY Mellon 0.2%Morningstar 0.2%S-Network 0.1%ISE 0.1%Zacks 0.1%Other 6.5%


Top 20 ETFs worldwide


112.71,04512,962.7LQD USUSiShares iBoxx $ Investment Grade Corporate

999.613,73412,690.6EWZ USUSiShares MSCI Brazil Index Fund

364.217,44911,864.2XIU CNCanadaiShares S&P/TSX 60 Index Fund

501.62,86711,821.0MDY USUSS&P 400 MidCap SPDR

111.21,63511,675.9IWD USUSiShares Russell 1000 Value Index Fund

70.166911,030.1AGG USUSiShares Barclays Aggregate Bond Fund

1,126.614,91110,866.7XLE USUSEnergy Select Sector SPDR Fund

78.281710,673.0IJH USUSiShares S&P MidCap 400 Index Fund

785.96,3549,841.8DIA USUSSPDR Dow Jones Industrial Average ETF

186.97,9059,388.3IUSA LNUKiShares S&P 500

2,313

45,499

1,975

787

52,531

2,490

71,400

13,561

23,570

137,432

ADV(‘000

shares)

139.713,677.6IWF USUSiShares Russell 1000 Growth

3,695.116,300.4IWM USUSiShares Russell 2000 Index Fund

134.619,066.0VTI USUSVanguard Total Stock Market ETF

83.8

3,027.7

330.7

3,271.5

825.4

1,091.8

18,178.1

ADV(US$ Mn)

Ranked by Assets Under Management (AUM)

19,497.5TIP USUSiShares Barclays TIPS Bond Fund

25,435.2QQQQ USUSPowerShares QQQ Trust

28,142.7IVV USUSiShares S&P 500 Index Fund

36,420.6EEM USUSiShares MSCI Emerging Markets

39,125.4EFA USUSiShares MSCI EAFE Index Fund

42,825.5VWO USUSVanguard MSCI Emerging Markets ETF

94,779.0SPY USUSSPDR S&P 500

AUM(US$ Mn)

Bloombergticker

CountrylistedETF

9,841.86,354785.9DIA USUSSPDR Dow Jones Industrial Average ETF

1,656.919,540628.7FAS USUSDirexion Daily Financial Bull 3x Shares

5,695.314,868592.5TBT USUSProShares UltraShort 20+ Year Treasury

6,809.513,865582.1FXI USUSiShares FTSE China 25 Index Fund

1,703.710,465551.9SSO USUSProShares Ultra S&P500

614.26,899548.2TNA USUSDirexion Daily Small Cap Bull 3x Shares

11,821.02,867501.6MDY USUSS&P 400 MidCap SPDR

2,193.322,458483.5SDS USUSProShares UltraShort S&P500

607.79,508461.6XRT USUSSPDR S&P Retail ETF

3,847.911,826437.2XLI USUSIndustrial Select Sector SPDR Fund

48,083

13,561

9,893

13,734

23,570

14,911

52,531

71,400

45,499

137,432

ADV(‘000

shares)

7,920.9807.7XLF USUSFinancial Select Sector SPDR Fund

39,125.4825.4EFA USUSiShares MSCI EAFE Index Fund

2,676.1892.5TLT USUSiShares Barclays 20+ Year Treasury

12,690.6

42,825.5

10,866.7

25,435.2

36,420.6

16,300.4

94,779.0

AUM(US$ Mn)

Ranked by US$ Average Daily Trading Volumes (ADV)

999.6EWZ USUSiShares MSCI Brazil Index Fund

1,091.8VWO USUSVanguard MSCI Emerging Markets ETF

1,126.6XLE USUSEnergy Select Sector SPDR Fund

3,027.7QQQQ USUSPowerShares QQQ Trust

3,271.5EEM USUSiShares MSCI Emerging Markets

3,695.1IWM USUSiShares Russell 2000 Index Fund

18,178.1SPY USUSSPDR S&P 500

ADV(US$ Mn)

Bloombergticker

CountrylistedETF


Global ETF listings

12345

67891011121314151617181920212223242526

Note: Providers = primary ETF providers. AUM = Assets Under Management in primary listings only. Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

0.0233Portugal0.1111Poland

71.010712215United Kingdom0.0111United Arab Emirates0.251212Turkey

40.17615114Switzerland2.928025Sweden1.326812Spain2.282626South Africa0.0111Slovenia0.0122Saudi Arabia0.0111Russia

0.7266Norway0.3410812Netherlands2.7450923Italy0.521414Ireland0.0111Hungary0.1233Greece

116.2111,221409Germany62.69484261France0.3111Finland0.11231Belgium0.11211Austria

AUM US$ Bn

#providers

# totallistings

# primarylistingsCountry

32.478481Japan0.0111Indonesia0.471717India

26.6107243Hong Kong11.3142020China3.764120Australia

AUM US$ Bn

#providers

# totallistings


929.128919919United States8.4330819Mexico

--50-Chile40.34197169Canada1.8277Brazil

AUM US$ Bn

#providers

# totallistings


1

2

3

4

5

67

8

91112

13

14

15

1619

20

21

22

23

24

2526

27

2810

35

36

37

38

39

40

29

3031

32

33

34

2728

17

18

293031323334 0.1344Thailand

2.821714Taiwan5.4136767South Korea3.087421Singapore0.4266New Zealand0.1354Malaysia

AUM US$ Bn

#providers

# totallistings


353637383840

Americas

EMEA

Asia Pacific Asia Pacific (continued)


Top 25 ETP providers around the world: ranked by assets


0.0%-1.3%$0.00.0%000.1%$0.11UTI Asset Management

YTD changeFeb-11

0.2%4.4%$0.80.0%0210.8%$18.94iShares

0.0%26.9%$0.00.0%000.1%$0.24Mitsubishi UFJ Trust and Banking Corporation

0.0%41.5%$0.10.0%000.1%$0.24Morgan Stanley

0.0%-12.7%$0.00.0%000.1%$0.23Nomura Asset Management

0.0%3.6%$0.00.0%000.1%$0.23Lyxor

0.0%11.8%$0.010.5%200.1%$0.221RBS

0.0%10.1%$0.00.0%010.1%$0.24Credit Suisse

0.0%4.8%$0.00.0%000.2%$0.41Benchmark Asset Management

0.1%29.6%$0.20.0%000.4%$0.71GreenHaven Commodity Services

0.0%0.3%$0.00.0%000.7%$1.228Source Markets

0.1%23.1%$0.30.0%000.8%$1.432db ETC

0.2%31.6%$0.40.0%001.0%$1.87Swedish Export Credit Corp

-0.1%-2.0%$0.00.0%031.3%$2.31Absa Capital

0.0%2.7%$0.10.0%0131.5%$2.59Rydex SGI

0.3%25.9%$0.516.7%2381.5%$2.614ProShares

0.1%13.1%$0.30.0%011.5%$2.64JPMorgan Chase

0.2%11.0%$0.41.1%202.1%$3.6180UBS AG

0.1%6.8%$0.30.0%002.5%$4.342Societe Generale

0.0%2.1%$0.10.0%042.9%$5.19United States Commodity Funds

0.4%17.8%$0.80.0%003.2%$5.617Merrill Lynch

0.3%8.6%$0.71.6%1225.3%$9.364Barclays (iPath)

0.9%15.6%$2.00.0%058.3%$14.536Deutsche Bank

-0.1%2.0%$0.56.0%135514.8%$25.9230ETF Securities

-3.0%-6.3%-$3.70.0%0031.3%$54.81State Street Global Advisors

% marketshare

%assets

Assets(US$ Bn)

%ETPs

# ETPs

#planned

%total

Assets(US$ Bn)

#ETPsProvider


Top 20 ETPs worldwide


117.521,9292,384.6UNG USUSUnited States Natural Gas Fund LP

6.44622,270.8GLD SJSouth AfricaNewGold ETF

19.95501,975.8GSG USUSiShares S&P GSCI Commodity-Indexed Trust

798.320,1191,912.6USO USUSUnited States Oil Fund LP

11.71,2201,332.4AIGA LNUKETFS Agriculture DJ-UBSCI

624.119,8061,305.0VXX USUSiPath S&P 500 VIX Short-Term Futures ETN

25.71831,239.7SGOL USUSETFS Physical Swiss Gold Shares

7.050944.1SGLD LNUKGold Source P-ETC

18.9241907.6PALL USUSETFS Physical Palladium Shares

54.32,449896.3UUP USUSPowerShares DB US Dollar Index Bullish

901

488

4,998

3,725

106

6,398

236

2,234

26,534

13,640

ADV(‘000

shares)

34.22,565.7AMJ USUSJPMorgan Alerian MLP Index ETN

24.53,145.7DJP USUSiPath Dow Jones-UBS Commodity Index TR

816.43,151.6OIH USUSOil Services HOLDRS

129.3

14.5

88.1

32.7

66.3

864.0

1,874.0

ADV(US$ Mn)

Ranked by assets

3,790.3DBA USUSPowerShares DB Agriculture Fund

5,277.4GBS LNUKGBS Bullion Securities

5,369.6IAU USUSiShares Gold Trust

5,553.5PHAU LNUKETFS Physical Gold

5,874.7DBC USUSPowerShares DB Commodity Index

11,461.1SLV USUSiShares Silver Trust

54,816.2GLD USUSSPDR Gold Trust

Assets(US$ Mn)

Bloombergticker

CountrylistedETP

376.7851116.6FXE USUSEuro Currency Trust

5,369.66,39888.1IAU USUSiShares Gold Trust

287.572676.7RTH USUSRetail HOLDRS

5,874.72,23466.3DBC USUSPowerShares DB Commodity Index

896.32,44954.3UUP USUSPowerShares DB US Dollar Index Bullish

831.01,77346.4OIL USUSiPath S&P GSCI Crude Oil Total TR

722.281446.4VXZ USUSiPath S&P 500 VIX Mid-Term Futures ETN

108.640936.3RKH USUSRegional Bank HOLDRS

136.71,11835.6ZSL USUSProShares UltraShort Silver

2,565.790134.2AMJ USUSJPMorgan Alerian MLP Index ETN

21,929

3,725

2,776

1,130

7,113

19,806

20,119

4,998

26,534

13,640

ADV(‘000

shares)

2,384.6117.5UNG USUSUnited States Natural Gas Fund LP

3,790.3129.3DBA USUSPowerShares DB Agriculture Fund

468.3139.0UCO USUSProShares Ultra DJ-UBS Crude Oil

710.3

750.2

1,305.0

1,912.6

3,151.6

11,461.1

54,816.2

Assets(US$ Mn)


203.1AGQ USUSProShares Ultra Silver

256.2SMH USUSSemiconductor HOLDRS

624.1VXX USUSiPath S&P 500 VIX Short-Term Futures ETN

798.3USO USUSUnited States Oil Fund LP

816.4OIH USUSOil Services HOLDRS

864.0SLV USUSiShares Silver Trust

1,874.0GLD USUSSPDR Gold Trust

ADV(US$ Mn)

Bloombergticker

CountrylistedETP


0.8101010India

0.0276Hong Kong

0.6155Australia

Assets US$ Bn

#providers

# totallistings


3.31141111Switzerland

27.15453316United Kingdom

0.0111United Arab Emirates

2.3477South Africa

--6-Netherlands

0.019712Italy

15.87319319Israel

1.8640893Germany

0.21463France

--1-Botswana

Assets US$ Bn

#providers

# totallistings


Global ETP listings

15

16

17

1

2

3

5

6

7

8

9

10

11

12

13

Note: Providers = primary ETP providers. Assets = Assets Under Management in primary listings only. Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

--2-Chile

122.922198198United States

--23-Mexico

--24-Canada

Assets US$ Bn

#providers

# totallistings


0.0222South Korea

--2-Singapore

0.44299Japan

Assets US$ Bn

#providers

# totallistings


18

19

20

Americas

EMEA

Asia Pacific Asia Pacific (continued)

14

4

106

5

11

98

13

14

19

20

15

1617

18

1271

3

4

2


Top 25 ETF/ETP providers around the world: ranked by assets


YTD changeFeb-11

0.2%6.2%$9.21.5%1110.2%$157.766Vanguard

0.0%-1.8%-$0.10.0%01740.4%$6.539Direxion Shares0.1%22.3%$1.22.3%1150.4%$6.744First Trust Advisors0.0%-1.7%-$0.111.4%450.4%$6.739ETFlab Investment0.0%10.0%$0.70.0%030.5%$7.217Nikko Asset Management0.1%23.0%$1.41.2%1150.5%$7.685Source Markets0.0%1.8%$0.13.0%11080.5%$7.634Rydex SGI0.0%5.7%$0.422.2%470.5%$7.922HSBC/Hang Seng0.1%21.3%$1.417.2%500.5%$8.034UBS Global Asset Management0.1%17.8%$1.32.2%200.5%$8.494Amundi ETF0.0%5.2%$0.40.0%000.6%$9.090Commerzbank0.0%8.6%$0.71.6%1220.6%$9.364Barclays (iPath)0.0%3.3%$0.32.3%1720.7%$10.245WisdomTree Investments-0.1%-3.2%-$0.40.0%000.8%$11.81Bank of New York0.0%2.0%$0.20.0%000.8%$12.07Zurich Cantonal Bank0.0%4.4%$0.77.4%401.1%$16.358Credit Suisse Asset Management-0.1%-0.6%-$0.10.0%001.1%$16.535Nomura Asset Management0.0%5.5%$1.10.0%0351.4%$21.129Van Eck Associates Corp0.0%6.9%$1.62.7%31361.6%$25.2115ProShares0.0%2.5%$0.65.8%14581.7%$26.8257ETF Securities-0.1%2.0%$1.00.5%1113.3%$51.2212db x-trackers/db ETC-0.1%2.0%$1.11.3%213.5%$54.4158Lyxor Asset Management0.3%11.6%$6.40.0%0544.0%$61.7161PowerShares/Deutsche Bank

-0.1%3.2%$7.94.4%53016.7%$257.1119State Street Global Advisors-0.6%2.6%$15.80.6%31739.7%$612.5480iShares

% marketshare

%assets

Assets(US$ Bn)

% ETFs/ETPs

# ETFs/ETPs

#planned

%total

Assets(US$ Bn)

# ETFs/ETPsProvider


ETFs and ETPs listed in the United States

At the end of February 2011, the ETF industry in the United States had 919 ETFs and assets of US$929.1 Bn, from 28 providers on two exchanges. This compares to 807 ETFs and assets of US$678.6 Bn, from 28 providers on two exchanges at the end of February 2010.

29 January 2011 marked the 18th anniversary of ETFs in the United States.

Assets

• YTD, assets have increased by 4.3% from US$891.0 Bn to US$929.1 Bn, which is less than the 5.5% increase in the MSCI US Index inUS dollar terms. This compares to a 3.8% decrease in assets over the same period in 2010.

• US$7.5 Bn of net new assets went into United States listed ETFs/ETPs in February 2011. US$2.7 Bn net inflows went into equity ETFs/ETPs, of which US$4.2 Bn went into ETFs/ETPs tracking North American indices, while ETFs/ETPs tracking emerging market indices saw net outflows of US$5.3 Bn. Fixed income ETFs/ETPs saw net inflows of US$1.0 Bn, of which US$0.5 Bn went into high yield bond ETFs/ETPs while government bond ETFs/ETPs saw net outflows of US$0.1 Bn. Commodity ETFs/ETPs experienced net inflows of US$3.5 Bn, of which ETFs/ETPs providing exposure to agricultural commodities saw net inflows of US$1.5 Bn and US$0.8 Bn net inflows went into broad commodity exposure ETFs/ETPs in February 2011.

• US$17.8 Bn of net new assets went into United States listed ETFs/ETPs in 2011 YTD. US$11.3 Bn net inflows went into equity ETFs/ETPs, of which US$14.8 Bn went into ETFs/ETPs tracking North American indices, while ETFs/ETPs tracking emerging market indices saw net outflows of US$9.2 Bn. Fixed income ETFs/ETPs saw net inflows of US$3.8 Bn, of which US$1.6 Bn went into high yield bond ETFs/ETPs while municipal bond ETFs/ETPs saw net outflows of US$0.1 Bn. Commodity ETFs/ETPs experienced net inflows of US$1.9 Bn, of which ETFs/ETPs providing exposure to agricultural commodities saw net inflows of US$2.6 Bn and US$1.3 Bn net inflows went into broad commodity exposure ETFs/ETPs in 2011 YTD.

• YTD, US$17.8 Bn net new asset flows went into United States listed ETFs/ETPs compared to US$11.8 Bn net outflows over the same period in 2010. Net new asset flows into ETFs/ETPs tracking North American indices were US$14.8 Bn YTD compared to US$14.5 Bn net outflows over the same period in 2010 and net outflows from emerging market indices were US$9.2 Bn YTD, greater than theUS$2.6 Bn net outflows over the same period in 2010. Fixed income ETF/ETP net inflows were US$3.8 Bn YTD, less than the US$5.4 Bn net inflows over the same period in 2010, and net inflows into commodity ETFs/ETPs were US$1.9 Bn YTD compared to US$1.2 Bn net outflows over the same period in 2010.



ETFs and ETPs listed in the United States (continued)

ETFs

• YTD, the number of ETFs have increased by 2.6% with 23 new ETFs launched. This compares to a 4.5% increase in the number of ETFsover the same period in 2010, when 35 new ETFs launched.

• The top 100 ETFs, out of 919, account for 81.8% of United States ETF AUM, while 460 ETFs have less than US$100.0 Mn in assets,371 ETFs have less than US$50.0 Mn in assets and 124 ETFs have less than US$10.0 Mn in assets.

Trading volume

• In February 2011, the ETF average daily trading volume in US dollars increased by 26.4% to US$51.9 Bn, compared to December 2010. This compares to average daily trading volume of US$69.2 Bn in February 2010.

• In February 2011, United States ETF turnover was 21.2% of all United States equity turnover, which is less than the 21.6% reported in December 2010.

ETF providers

• iShares is the largest ETF provider in terms of both number of products and assets, 216 ETFs and US$438.9 Bn respectively, reflecting 47.2% market share; State Street Global Advisors is second with 97 ETFs, assets of US$188.8 Bn and 20.3% market share; followed by Vanguard with 64 ETFs, assets of US$157.5 Bn and 16.9% market share, at the end of February 2011.

• Of the US$4.2 Bn of net new assets in United States listed ETFs in February 2011, Vanguard gathered the largest net inflows withUS$2.5 Bn, followed by iShares with US$1.2 Bn net inflows, while State Street Global Advisors saw US$1.6 Bn net outflows.

• YTD, of the US$16.3 Bn net new assets into United States listed ETFs, Vanguard gathered the largest net inflows with US$6.7 Bn, followed by State Street Global Advisors with US$3.5 Bn net inflows, while Bank of New York had the largest net outflows withUS$1.1 Bn YTD.

• The top three ETF providers, out of 28, account for 84.5% of United States ETF AUM. This compares to 85.4% out of 28 providers, at the end of February 2010.

• 26 firms in the United States plan to launch their first ETF in the future.



ETFs and ETPs listed in the United States (continued)

Mutual funds

• During 2010, according to Strategic Insight, net sales of mutual funds (excluding ETFs) were minus US$270.6 Bn in the United States, while net sales of ETFs domiciled in the United States were positive US$110.4 Bn.

ETPs

• Additionally, there were 198 other ETPs1 with assets of US$122.9 Bn from 22 providers on one exchange. This compares to 145 ETPs with assets of US$84.5 Bn from 17 providers on one exchange, at the end of February 2010.

ETFs and ETPs

• Assets in United States listed ETFs and ETPs crossed the US$1 trillion milestone in December 2010.

• Combined, there were 1,117 products with assets of US$1,052.0 Bn, from 46 providers on two exchanges in the United States.This compares to 952 products with assets of US$763.1 Bn from 41 providers on two exchanges, at the end of February 2010.


Note: Data as at end February 2011. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, National Stock Exchange (NSX).


United States ETF and ETP asset growth


198

919

$122.9

$929.1

Feb-11

185

896

$120.2

$891.0

2010

142

772

$88.1

$705.5

2009

136

698

$45.3

$497.1

2008

71

601

$40.5

$580.7

2007

37

343

$25.9

$406.8

2006

20

201

$14.4

$299.4

2005

17

152

$8.9

$227.7

2004

17

117

$6.1

$150.7

2003

17

113

$4.0

$102.3

2002

17

101

$3.8

$84.6

2001

142# ETPs

8130291919211# ETFs

$5.0$2.0ETP assets

$65.6$33.9$15.6$6.7$2.4$1.1$0.4$0.5ETF assets

20001999199819971996199519941993Assets (US$ Bn)

0

100

200

300

400

500

600

700

800

900

1,000

Assets (US$ Bn)

0

100

200

300

400

500

600

700

800

900

1,000

# products


continued…

ETF providers in the United States: ranked by AUM


$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.1$0.0$0.1$2.3$0.1$0.2$0.5$0.9$3.3$3.2$2.0

$24.1$15.2

ADV(US$ Bn)

0.0%98.2%$0.0100.0%1$0.0$0.010.0%$0.02Pax World Management0.0%-7.9%$0.00.0%0$0.0$0.000.0%$0.05FaithShares0.0%47.1%$0.00.0%0$0.0$0.020.0%$0.01US One Trust

$0.0$0.0$0.0$0.0$0.0$0.0$0.1$0.0$0.0$0.1$0.1$0.1$0.4$0.1-$0.4$0.0$0.5$0.1-$0.6$1.0$0.8-$0.3$2.5-$1.6$1.2

Feb-11NNA

(US$ Bn)

$0.0$0.0$0.0$0.0$0.0$0.0$0.2$0.1$0.0$0.2$0.2$0.3$0.7$0.0-$0.2-$0.2$0.9$0.5-$1.1$2.0$1.0$2.6$6.7$3.5-$1.1

YTD NNA(US$ Bn)

YTD changeFeb-11

0.3%6.2%$9.21.6%1116.9%$157.564Vanguard

0.0%22.4%$0.00.0%000.0%$0.01Javelin Investment Management0.0%11.9%$0.00.0%030.0%$0.05Grail Advisors0.0%5.0%$0.00.0%0390.0%$0.15DBX Strategic Advisors0.0%32.3%$0.00.0%020.0%$0.24Jefferies Asset Management0.0%18.6%$0.00.0%000.0%$0.21Fidelity Management & Research0.0%28.8%$0.020.0%170.0%$0.26AdvisorShares0.0%52.0%$0.20.0%0240.0%$0.59IndexIQ Advisors0.0%8.6%$0.00.0%0140.1%$0.59Emerging Global Advisors0.0%10.6%$0.10.0%080.1%$0.66RevenueShares0.0%29.1%$0.20.0%070.1%$0.93ALPS ETF Trust0.0%13.0%$0.229.4%5290.2%$1.522Global X Funds0.0%12.1%$0.30.0%080.3%$2.413PIMCO0.1%28.6%$0.818.2%200.4%$3.513Charles Schwab Investment Management0.0%0.0%$0.010.5%4290.4%$3.642Guggenheim Funds0.0%1.4%$0.14.2%1950.5%$5.125Rydex SGI0.0%-1.8%-$0.10.0%01740.7%$6.539Direxion Shares0.1%22.3%$1.22.3%1150.7%$6.744First Trust Advisors0.0%3.3%$0.32.3%1721.1%$10.245WisdomTree Investments-0.1%-3.2%-$0.40.0%001.3%$11.81Bank of New York0.0%5.5%$1.10.0%0352.3%$21.129Van Eck Associates Corp0.0%5.1%$1.11.0%1982.4%$22.7101ProShares0.3%10.4%$4.30.0%0484.9%$45.9111PowerShares

0.5%6.8%$12.05.4%52920.3%$188.897State Street Global Advisors-1.2%1.7%$7.50.0%01247.2%$438.9216iShares

% marketshare

%AUM

AUM(US$ Bn)

%ETFs

#ETFs

# planned

%total

AUM(US$ Bn)

#ETFsProvider


ETF providers in the United States: ranked by AUM (continued)


$51.9

--------------------------

ADV(US$ Bn)

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

4.3%$38.12.6%23$16.3$4.2875100.0%$929.1919Total

------------------------

Feb-11NNA

(US$ Bn)

------------------------

YTD NNA(US$ Bn)

YTD changeFeb-11

-----22---Factor Advisors

-----1---T Rowe Price-----1---Spinnaker ETF Trust-----2---ShariahShares-----36---Russell Investments-----4---RiverPark Advisors-----1---OppenheimerFunds-----2---Northern Trust-----2---Next Investments-----1---Neuberger Berman-----2---Macro Securities Depositor-----1---Legg Mason-----2---JP Morgan Asset Management-----1---John Hancock-----1---Janus Capital Management-----3---Huntington Asset Advisors-----1---Hartford-----5---Georgetown Investment Management-----21---FocusShares-----1---Florentez Investment-----1---Firsthand Capital-----0---FactorShares

-----5---Exchange Traded Spreads Trust-----5---Eaton Vance

% marketshare

%AUM

AUM(US$ Bn)

%ETFs

#ETFs

#planned

%total

AUM(US$ Bn)

#ETFsProvider


United States ETF/ETP net new assets by type of exposure

Note: NNA – Net New Assets. Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, National Stock Exchange (NSX).

continued…

Exposure# ETFs/ETPs

ADV(US$ Mn)

Assets (US$ Mn)

Equity 782 49,570.9 778,979.5 2,660.4 11,263.4 74,846.7 36,476.3 North America 481 40,073.4 525,866.7 4,232.7 14,804.5 37,000.6 1,987.0

Active 4 2.6 54.9 26.9 39.4 5.6 12.8 Broad 265 31,715.2 404,625.6 1,768.0 10,061.4 26,660.8 (11,180.1) Consumer goods/services 25 965.0 9,587.4 (327.3) (1,116.0) 2,278.4 287.2 Energy 31 2,429.8 28,492.6 3,613.1 3,963.9 2,562.8 1,145.3 Financials 31 2,070.9 19,783.9 (1,309.0) (284.4) 1,281.8 1,409.1 Healthcare 21 306.3 8,100.4 (464.3) (322.2) (587.1) (400.8) Industrials 15 534.4 6,062.2 (299.9) (19.3) 1,031.7 914.1 Materials 11 726.2 6,928.9 418.8 251.7 857.5 1,206.2 Other 6 16.7 2,720.1 33.0 43.5 7.6 (77.1) Real estate 20 535.5 17,074.6 389.3 634.4 1,121.5 4,377.4 Technology 36 603.9 16,257.2 672.2 1,788.1 1,459.5 2,626.7 Telecommunications 6 10.4 1,094.5 (68.8) (114.4) 88.6 139.4 Utilities 10 156.5 5,084.5 (219.2) (121.4) 232.0 1,526.9

Asia Pacific 28 604.4 22,121.9 298.3 218.2 1,231.1 1,825.8 Europe 28 292.8 12,220.6 1,311.5 1,530.1 834.4 1,574.0 Global 57 130.9 14,293.6 854.9 1,463.7 1,282.7 3,353.7 Global (ex-US) 72 1,026.0 67,462.8 1,308.4 2,400.1 4,693.7 691.4

YTD-11 NNA(US$ Mn)

2009 NNA(US$ Mn)

Feb-11

NNA (US$ Mn)

2010 NNA(US$ Mn)


United States ETF/ETP net new assets by type of exposure (continued)


continued…

Exposure# ETFs/ETPs

ADV(US$ Mn)

Assets (US$ Mn)

Emerging markets – equity 116 7,443.5 137,013.9 (5,345.4) (9,153.3) 29,804.2 27,044.5 Broad – emerging markets 41 4,622.5 88,500.3 (4,246.5) (9,464.3) 25,546.1 16,691.3 Regional – emerging markets 13 115.1 4,475.2 (307.9) (514.6) 269.3 1,400.7 Country – emerging markets 62 2,705.9 44,038.4 (791.0) 825.6 3,988.9 8,952.5

Brazil 9 1,021.9 13,846.7 (50.3) 1,187.7 951.2 2,545.7 Chile 1 22.4 851.5 (10.6) (14.4) 486.4 50.1 China 22 624.7 9,158.7 (501.1) (1,172.8) (1,612.1) 2,191.1 Colombia 1 3.2 133.6 (21.1) (27.4) 158.2 5.3 Egypt 1 6.8 28.4 - 17.6 8.8 India 7 128.0 2,996.5 (68.0) (166.8) 1,008.6 774.6 Indonesia 2 14.8 623.5 (44.2) 424.8 600.7 167.5 Malaysia 1 36.1 925.7 (72.3) (40.2) 225.8 61.0 Mexico 3 171.9 1,475.3 (79.0) (207.9) 288.3 302.0 Peru 1 15.6 670.9 127.1 151.8 299.8 96.3 Philippines 1 0.8 21.8 4.4 7.9 16.0 Poland 2 3.4 179.4 9.2 26.2 132.3 7.3 Russia 3 170.5 3,462.8 233.5 501.2 960.0 378.8 South Africa 1 21.3 601.1 (80.8) (38.9) 35.7 18.4 South Korea 2 254.2 4,311.5 6.0 247.5 336.8 770.6 Taiwan 2 160.4 3,401.3 (41.4) 173.0 (648.8) 1,093.7 Thailand 1 11.4 569.2 (24.0) (88.6) 280.0 174.8 Turkey 1 33.1 508.4 (195.8) (195.8) 301.5 204.7 Vietnam 1 5.6 272.2 17.5 40.9 159.8 88.2

YTD-11 NNA(US$ Mn)

2009 NNA(US$ Mn)

Feb-11

NNA (US$ Mn)

2010 NNA(US$ Mn)


United States ETF/ETP net new assets by type of exposure (continued)


Exposure# ETFs/ETPs

ADV(US$ Mn)

Assets (US$ Mn)

Fixed income 138 2,726.5 141,243.1 994.4 3,843.5 29,424.8 44,801.9 Active 6 8.9 985.1 42.3 132.9 798.7 48.8 Aggregate 11 204.3 29,205.6 72.9 123.0 5,039.0 8,216.7 Convertible 1 10.2 716.7 75.2 161.4 271.7 212.0 Corporate 21 221.5 27,035.6 227.4 897.3 5,044.7 10,560.6 Government 52 1,862.9 35,284.0 (89.2) 728.1 9,578.6 6,706.9 High yield 8 227.6 16,025.2 476.1 1,557.9 5,612.1 4,429.4 Inflation 9 108.7 22,189.8 31.5 269.2 860.5 10,139.8 Mortgage 3 16.3 2,414.3 89.3 123.3 506.9 913.1 Municipal 27 66.1 7,386.7 68.8 (149.5) 1,712.7 3,574.6

Commodities 113 4,635.3 122,023.8 3,527.7 1,858.6 13,291.3 32,551.8 Agriculture 18 315.5 9,725.3 1,463.3 2,569.4 340.6 1,927.6 Broad 20 255.5 14,179.7 783.1 1,305.1 795.2 4,958.1 Energy 23 866.2 7,513.3 548.0 484.3 (953.1) 6,055.9 Industrial metals 20 61.8 2,476.7 212.8 494.0 420.9 798.1 Livestock 1 5.7 116.9 18.3 49.8 (37.0) 18.9 Precious metals 31 3,130.6 88,011.9 502.2 (3,044.1) 12,724.5 18,793.2

Currency 36 254.0 6,342.8 107.9 367.2 (2,169.7) 4,154.9 Alternative 17 565.9 2,384.3 102.5 342.4 3,354.7 1,258.7 Mixed 31 7.8 1,067.6 86.8 141.4 441.8 225.5

Total 1,117 57,760.5 1,052,041.2 7,479.6 17,816.4 119,189.5 119,469.1

YTD-11 NNA(US$ Mn)

2009 NNA(US$ Mn)

Feb-11

NNA (US$ Mn)

2010 NNA(US$ Mn)


Sector ETF net new assets

Note: 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. NNA – Net New Assets. Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, National Stock Exchange (NSX).

Feb-11 YTD Feb-11YTD % change

Dow Jones United States sector ETFs 7,354.5 12.4% 210.4 140.3 268.4 454.0 -112.4iShares Dow Jones U.S. Basic Materials IYM US DJUSBM 2.8% 2.6% 1,218.2 8.5% 60.7 40.3 45.8 66.7 85.0iShares Dow Jones U.S. Consumer Goods IYK US DJUSNC 3.4% 1.7% 298.6 -3.7% 17.3 4.0 -9.6 -16.1 -62.5iShares Dow Jones U.S. Consumer Services IYC US DJUSCY 4.7% 4.8% 212.4 1.3% 19.4 4.1 -0.5 -7.3 19.3iShares Dow Jones U.S. Energy IYE US DJUSEN 7.4% 15.5% 1,145.4 42.1% 15.4 17.5 121.9 202.3 -21.1iShares Dow Jones U.S. Financial IYF US DJUSFN 2.9% 5.5% 559.9 20.3% 22.7 32.7 12.3 68.5 -54.5iShares Dow Jones U.S. Healthcare IYH US DJUSHC 3.4% 4.0% 587.7 6.5% 26.6 6.0 0.0 13.0 -70.1iShares Dow Jones U.S. Industrial IYJ US DJUSIN 2.7% 7.1% 500.0 35.4% 9.2 10.3 63.6 103.9 16.1iShares Dow Jones U.S. Technology IYW US DJUSTC 2.0% 6.1% 1,676.2 15.5% 22.0 15.1 93.8 137.1 -35.7iShares Dow Jones U.S. Telecommunications IYZ US DJSTELT 1.5% -0.2% 634.6 -16.4% 7.7 7.8 -66.8 -121.9 16.3iShares Dow Jones U.S. Utilities IDU US DJUSUT 1.7% 3.3% 521.4 4.8% 9.6 2.6 7.9 7.8 -5.1

S&P equal weight sector ETFs 406.9 18.2% 19.9 4.8 18.9 38.8 26.2Rydex S&P Equal Weight Consumer Discretionary RCD US S25 6.1% 5.2% 24.1 -12.3% 2.1 0.3 -4.8 -4.8 5.0Rydex S&P Equal Weight Consumer Staples RHS US S30 5.1% 2.5% 14.7 2.7% 0.1 0.1 0.0 0.0 2.5Rydex S&P Equal Weight Energy RYE US S10 7.8% 16.0% 40.1 82.4% 2.9 1.1 10.4 13.5 0.1Rydex S&P Equal Weight Financial RYF US S40 3.7% 6.3% 23.7 31.0% 0.3 0.3 2.9 4.3 1.9Rydex S&P Equal Weight Health Care RYH US S35 3.2% 5.9% 49.9 -0.7% 0.8 0.3 -9.7 -3.1 -22.3Rydex S&P Equal Weight Industrial RGI US S20 1.0% 4.4% 53.8 10.6% 0.8 0.3 2.9 2.9 21.5Rydex S&P Equal Weight Materials RTM US S15 2.2% 3.9% 45.9 12.1% 0.5 0.5 0.0 3.2 0.2Rydex S&P Equal Weight Technology RYT US S45 4.4% 8.4% 131.4 28.4% 10.1 1.6 14.7 20.3 9.9Rydex S&P Equal Weight Utilities RYU US S55 0.6% 2.4% 23.4 14.6% 2.3 0.3 2.5 2.5 7.4

S&P select sector ETFs 43,949.2 9.6% 8,667.6 3,790.2 155.7 1,218.8 4,791.3Consumer Discretionary Select Sector SPDR XLY US IXY 6.0% 5.3% 2,124.1 -14.3% 727.9 181.1 -106.6 -465.5 641.7Consumer Staples Select Sector SPDR XLP US IXR 2.8% 1.3% 3,028.0 -2.4% 607.6 168.6 -123.7 -107.2 521.7Energy Select Sector SPDR XLE US IXE 7.3% 15.1% 10,932.3 30.4% 2,458.1 1,145.7 1,568.1 1,282.9 1,392.0Financial Select Sector SPDR XLF US IXM 2.9% 5.8% 7,962.9 6.6% 1,489.5 870.1 -688.7 53.7 87.0Health Care Select Sector SPDR XLV US IXV 3.1% 3.7% 2,623.1 -3.1% 649.7 217.1 -261.3 -181.3 -274.5Industrial Select Sector SPDR XLI US IXI 2.2% 6.2% 3,867.7 3.3% 856.6 455.3 -386.5 -106.8 1,136.7Materials Select Sector SPDR XLB US IXB 2.6% 2.6% 2,703.9 4.2% 721.1 368.2 257.6 53.5 499.1Technology Select Sector SPDR XLK US IXT 2.1% 5.4% 7,013.4 19.9% 598.8 225.0 118.7 842.2 730.5Utilities Select Sector SPDR XLU US IXU 1.4% 2.5% 3,693.9 -1.7% 558.3 159.0 -221.8 -152.7 57.2

2010 net flows(US$ Mn)

ETF AUM (US$ Mn)

Index total return (US$)

ETF ADV(US$ Mn)

Feb-11 net flows(US$ Mn)

YTD 2011 net flows(US$ Mn)

ETF short interest

(US$ Mn)15-FebSector

ETF ticker

Index ticker

continued…


Sector ETF net new assets (continued)

Note: 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. NNA – Net New Assets. Data as at end February 2011.Source: National Stock Exchange (NSX), Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Feb-11 YTD Feb-11YTD % change

MSCI United States investable market sector ETFs 8,491.0 18.0% 64.2 78.1 587.9 1,333.1 2,588.0Vanguard Consumer Discretionary VCR US MZUSI0CD 5.4% 4.4% 385.7 8.2% 4.0 3.9 6.5 12.6 97.7Vanguard Consumer Staples VDC US MZUSI0CS 2.6% 0.9% 616.6 1.3% 3.6 3.2 -14.8 -0.2 -32.3Vanguard Energy VDE US MSCIEN 7.0% 14.5% 2,078.3 35.1% 21.8 28.9 165.1 287.8 274.2Vanguard Financials VFH US MZUSI0FN 2.8% 5.2% 680.3 18.1% 1.3 5.8 3.3 71.0 13.4Vanguard Health Care VHT US MZUSI0HC 3.3% 3.9% 663.7 9.0% 3.2 2.9 6.0 28.9 -9.4Vanguard Industrials VIS US MSCIIN 2.4% 6.1% 558.3 26.8% 12.0 6.7 55.6 88.7 27.8Vanguard Information Technology VGT US MZUSI0IT 2.2% 6.3% 1,815.4 21.9% 4.8 14.0 120.2 227.9 361.8Vanguard Materials VAW US MZUSI0MT 2.8% 3.1% 685.9 11.7% 11.3 8.3 25.8 50.4 32.0Vanguard Telecommunication Services VOX US MSCITC 2.3% -1.3% 325.2 3.1% 0.7 1.6 0.0 6.6 73.2Vanguard Utilities VPU US MZUSI0UT 1.2% 2.6% 681.5 5.3% 1.5 2.8 -6.9 13.7 169.3Vanguard REIT VNQ US RMZ 4.6% 8.1% 8,682.6 15.8% 182.6 78.9 227.1 545.8 1,580.4

S&P global sector ETFs 5,217.6 9.3% 62.3 38.3 57.1 138.3 -25.9iShares S&P Global Consumer Discretionary RXI US SGD 4.3% 4.8% 139.6 6.9% 0.3 0.9 2.7 2.7 25.5iShares S&P Global Consumers Staples KXI US SGCS 3.0% 0.7% 316.7 -3.3% 1.8 2.1 -12.3 -12.3 -15.4iShares S&P Global Energy IXC US SGES 6.4% 13.0% 1,559.6 18.8% 20.4 12.0 30.5 72.5 112.9iShares S&P Global Financials IXG US SGFS 3.9% 8.0% 310.3 7.8% 17.0 3.7 0.0 0.0 -44.1iShares S&P Global Healthcare IXJ US SGH 3.6% 4.0% 486.4 2.0% 0.1 2.0 -7.9 -7.9 -46.3iShares S&P Global Industrials EXI US SGN 2.3% 6.0% 236.4 18.8% 2.3 1.9 11.3 25.2 10.1iShares S&P Global Materials MXI US SGM 3.8% 1.8% 825.2 6.1% 8.4 5.8 29.7 37.0 -252.1iShares S&P Global Technology IXN US SGI 1.2% 5.2% 647.4 7.7% 8.3 4.3 9.8 16.1 98.1iShares S&P Global Telecommunications IXP US SGT 2.4% 4.3% 428.7 4.7% 1.0 4.3 -9.0 2.7 67.0iShares S&P Global Utilities JXI US SGU 2.4% 5.4% 267.3 5.8% 2.9 1.4 2.3 2.3 18.4

MSCI ACWI ex. United States sector ETFs 53.1 3.4% 0.3 0.2 0.0 0.0 43.1iShares MSCI ACWI ex US Consumer Discretionary AXDI US MSWDUCDN 1.8% 2.3% 6.6 2.3% 0.0 0.0 0.0 0.0 5.3iShares MSCI ACWI ex US Consumer Staples AXSL US MSWDUCSN 2.6% -0.8% 3.0 -0.4% 0.0 0.0 0.0 0.0 2.4iShares MSCI ACWI ex US Energy AXEN US MSWDUENN 5.8% 9.4% 6.7 9.4% 0.1 0.1 0.0 0.0 5.1iShares MSCI ACWI ex US Health Care AXHE US MSWDUHCN 3.0% 2.9% 5.8 3.2% 0.0 0.0 0.0 0.0 5.0iShares MSCI ACWI ex US Industrials AXID US MSWDUINN 0.7% 2.7% 6.3 3.3% 0.0 0.0 0.0 0.0 5.0iShares MSCI ACWI ex US Information Technology AXIT US MSWDUITN -1.2% 1.4% 6.1 1.6% 0.1 0.0 0.0 0.0 5.1iShares MSCI ACWI ex US Materials AXMT US MSWDUMTN 3.5% 0.7% 6.9 0.5% 0.0 0.0 0.0 0.0 5.1iShares MSCI ACWI ex US Telecommunication Services AXTE US MSWDUTCN 1.9% 4.4% 6.0 4.4% 0.0 0.0 0.0 0.0 5.1iShares MSCI ACWI ex US Utilities AXUT US MSWDUUTN 1.8% 4.6% 5.7 4.8% 0.0 0.0 0.0 0.0 5.0

2010 net flows(US$ Mn)

ETF AUM (US$ Mn)

Index total return (US$)

ETF ADV(US$ Mn)

Feb-11 net flows(US$ Mn)

YTD 2011 net flows(US$ Mn)

ETF short interest

(US$ Mn)15-FebSector

ETF ticker

Index ticker


United States leveraged and inverse ETF/ETP net new assets by type of exposure


Exposure# ETFs/ETPs

ADV(US$ Mn)

Assets (US$ Mn)

Leveraged 88 3,370.0 13,685.8 91.8 (580.6) (3,044.7) (6,956.1) Equity 64 3,052.9 11,434.1 (170.9) (930.6) (2,878.6) (6,405.6)

Asia Pacific 2 0.4 16.5 - 0.0 3.0 8.7 Emerging markets 10 77.8 609.4 89.5 10.6 27.7 316.2 Europe – equity 1 0.0 3.8 - 0.0 2.8 - Global (ex-United States) 3 1.5 44.9 3.8 3.8 (3.9) 23.9 North America 48 2,973.1 10,759.4 (264.2) (945.0) (2,908.3) (6,754.3)

Alternative 2 6.2 27.8 13.3 16.0 27.0 Commodities 9 298.2 2,121.8 216.7 297.9 (183.3) (586.3) Currency 3 0.5 12.5 (1.5) (3.2) (1.0) 10.7 Fixed income 5 12.0 64.8 9.5 14.6 (8.9) 25.1 Mixed 5 0.1 24.8 24.7 24.7 -

Inverse 32 189.2 4,234.1 50.1 344.9 1,562.5 3,284.3 Equity 15 138.9 2,747.7 (25.6) 128.0 938.2 2,766.2

Emerging markets 2 5.7 266.6 47.6 52.1 44.5 273.3 Global (ex-United States) 1 1.0 78.5 (21.4) (21.4) 93.5 43.3 North America 12 132.3 2,402.6 (51.8) 97.3 800.2 2,449.6

Alternative 4 13.9 100.2 10.5 41.5 40.4 - Commodities 6 3.6 115.4 (9.4) 64.0 (2.7) 165.9 Currency 2 4.8 213.9 (9.8) (5.4) (128.7) 122.3 Fixed income 5 27.9 1,056.8 84.4 116.8 715.3 229.9

Leveraged inverse 84 2,438.0 15,477.1 918.9 1,622.5 6,407.8 16,649.9 Equity 64 1,657.2 7,490.0 410.5 1,119.3 2,910.8 13,636.1

Asia Pacific 2 0.2 14.2 - 0.0 (0.5) 18.6 Emerging markets 10 92.1 577.8 52.7 100.7 136.4 645.8 Europe – equity 1 1.4 42.3 (3.8) (2.4) 100.6 9.4 Global – equity 1 0.2 28.8 3.3 5.5 21.3 - Global (ex-United States) 3 0.9 29.9 0.5 (2.7) 31.1 13.5 North America 47 1,562.3 6,797.0 357.8 1,018.1 2,621.9 12,948.9

Commodities 10 98.6 542.8 1.6 49.5 316.9 337.3 Currency 2 28.5 767.6 69.7 145.9 514.6 170.2 Fixed income 8 653.8 6,676.8 437.0 307.9 2,665.5 2,506.2

Total 204 5,997.2 33,397.0 1,060.8 1,386.8 4,925.5 12,978.1

Feb-11

YTD NNA(US$ Mn)

2009 NNA(US$ Mn)

NNA (US$ Mn)

2010 NNA(US$ Mn)


Types of ETF exposure in the United States


$51.9

$0.0

$0.0

$0.2

$3.1

$0.6

$2.3

$0.1

$2.0

$3.9

$0.7

$0.3

$0.4

$0.5

$5.8

$2.3

$7.2

$22.6

$43.6

ADV(US$ Bn)

3.9%$0.511.5%$14.162Leveraged inverse

21.8%$0.220.1%$1.320Active

16.7%$0.200.1%$1.49Currency

2.2%$0.100.4%$3.615Inverse

2.8%$0.301.2%$11.462Leveraged

4.3%

-0.6%

11.4%

2.9%

-0.1%

6.5%

4.8%

8.6%

9.2%

11.1%

10.5%

-10.9%

8.7%

4.4%

%AUM

100.0%

1.3%

2.2%

14.2%

3.4%

3.6%

4.1%

4.2%

4.9%

11.2%

13.4%

14.5%

19.4%

78.8%

%total

$38.123$929.1919Total

-$0.11$12.222Commodities

$2.10$20.657Custom


$0.00$31.321Small-cap

$2.11$33.917Mid-cap

$1.71$38.321Broad market

$3.10$39.230Value

$3.90$45.930Growth

$10.45$103.9151Sector

$11.83$125.0160International

-$16.44$134.893Emerging markets

$14.40$179.840Large-cap

$30.914$732.1563Equity

AUM(US$ Bn)

#ETFs

AUM(US$ Bn)

#ETFsType of exposure

YTD changeFeb-11

Large-cap – equity 19.4%

Emerging markets – equity 14.5%

Fixed income 14.2%

International – equity 13.4%

Sector – equity 11.2%

Growth – equity 4.9%

Value – equity 4.2%

Broad market – equity 4.1%

Mid-cap – equity 3.6%

Small-cap – equity 3.4%

Custom 2.2%

Leveraged inverse 1.5%

Commodities 1.3%

Leveraged 1.2%

Inverse 0.4%

Currency 0.1%

Active 0.1%


Index providers in the United States: ranked by AUM


$51.9

$0.5

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.2

$0.0

$0.3

$0.5

$0.1

$0.2

$0.7

$3.7

$2.0

$6.7

$2.3

$8.7

$25.9

ADV(US$ Bn)

16.1%$0.900.7%$6.76Indxis

10.8%$0.300.3%$3.135Intellidex

8.2%$2.443.4%$31.5161Other

4.1%$3.329.0%$83.265Russell

2.9%$2.9211.4%$105.965Barclays Capital

0.1%$0.3328.5%$264.9119MSCI

6.8%$17.8429.9%$278.1182S&P

8.9%$0.200.2%$2.110Morningstar

3.7%$0.210.6%$5.824Structured Solutions

32.2%$1.800.8%$7.33Deutsche Boerse

-7.6%-$0.720.9%$7.910NYSE Euronext

1.4%$0.100.9%$8.635WisdomTree

3.7%$0.702.3%$21.22Markit

1.2%$0.322.4%$22.443FTSE

14.0%$3.713.3%$30.425NASDAQ OMX

9.4%$3.824.7%$43.884Dow Jones

4.3%

4.9%

9.7%

12.7%

10.4%

13.7%

-18.7%

%AUM

100.0%

0.0%

0.0%

0.1%

0.1%

0.2%

0.2%

%total

$38.123$929.1919Total

$0.00$0.23STOXX

$0.00$0.33Value Line

$0.10$0.810Zacks

$0.10$1.210ISE

$0.20$1.812S-Network

-$0.40$1.812BNY Mellon

AUM(US$ Bn)

#ETFs

AUM(US$ Bn)

#ETFsIndex provider

YTD changeFeb-11

S&P 29.9%

MSCI 28.5%

Barclays Capital 11.4%

Russell 9.0%

Dow Jones 4.7%

NASDAQ OMX 3.3%

FTSE 2.4%

Markit 2.3%

WisdomTree 0.9%

NYSE Euronext 0.9%

Deutsche Boerse 0.8%

Indxis 0.7%

Structured Solutions 0.6%

Intellidex 0.3%

Morningstar 0.2%

BNY Mellon 0.2%

S-Network 0.2%

ISE 0.1%

Zacks 0.1%

Value Line 0.0%

STOXX 0.0%

Other 3.4%


Top 20 ETFs in the United States


112.71,04512,962.7LQD USiShares iBoxx $ Investment Grade Corporate

999.613,73412,690.6EWZ USiShares MSCI Brazil Index Fund

501.62,86711,821.0MDY USS&P 400 MidCap SPDR

111.21,63511,675.9IWD USiShares Russell 1000 Value Index Fund

70.166911,030.1AGG USiShares Barclays Aggregate Bond Fund

1,126.614,91110,866.7XLE USEnergy Select Sector SPDR Fund

78.281710,673.0IJH USiShares S&P MidCap 400 Index Fund

785.96,3549,841.8DIA USSPDR Dow Jones Industrial Average ETF

67.68499,099.2BND USVanguard Total Bond Market ETF

78.11,3498,479.4VNQ USVanguard REIT ETF

2,313

45,499

1,975

787

52,531

2,490

71,400

13,561

23,570

137,432

ADV(‘000

shares)

139.713,677.6IWF USiShares Russell 1000 Growth Index Fund

3,695.116,300.4IWM USiShares Russell 2000 Index Fund

134.619,066.0VTI USVanguard Total Stock Market ETF

83.8

3,027.7

330.7

3,271.5

825.4

1,091.8

18,178.1

ADV(US$ Mn)


19,497.5TIP USiShares Barclays TIPS Bond Fund

25,435.2QQQQ USPowerShares QQQ Trust

28,142.7IVV USiShares S&P 500 Index Fund

36,420.6EEM USiShares MSCI Emerging Markets Index Fund

39,125.4EFA USiShares MSCI EAFE Index Fund

42,825.5VWO USVanguard MSCI Emerging Markets ETF

94,779.0SPY USSPDR S&P 500

AUM(US$ Mn)

Bloombergticker ETF

9,841.86,354785.9DIA USSPDR Dow Jones Industrial Average ETF

1,656.919,540628.7FAS USDirexion Daily Financial Bull 3x Shares

5,695.314,868592.5TBT USProShares UltraShort 20+ Year Treasury

6,809.513,865582.1FXI USiShares FTSE China 25 Index Fund

1,703.710,465551.9SSO USProShares Ultra S&P500

614.26,899548.2TNA USDirexion Daily Small Cap Bull 3x Shares

11,821.02,867501.6MDY USS&P 400 MidCap SPDR

2,193.322,458483.5SDS USProShares UltraShort S&P500

607.79,508461.6XRT USSPDR S&P Retail ETF

3,847.911,826437.2XLI USIndustrial Select Sector SPDR Fund

48,083

13,561

9,893

13,734

23,570

14,911

52,531

71,400

45,499

137,432

ADV(‘000

shares)

7,920.9807.7XLF USFinancial Select Sector SPDR Fund

39,125.4825.4EFA USiShares MSCI EAFE Index Fund

2,676.1892.5TLT USiShares Barclays 20+ Year Treasury

12,690.6

42,825.5

10,866.7

25,435.2

36,420.6

16,300.4

94,779.0

AUM(US$ Mn)


999.6EWZ USiShares MSCI Brazil Index Fund

1,091.8VWO USVanguard MSCI Emerging Markets ETF

1,126.6XLE USEnergy Select Sector SPDR Fund


3,271.5EEM USiShares MSCI Emerging Markets Index Fund

3,695.1IWM USiShares Russell 2000 Index Fund

18,178.1SPY USSPDR S&P 500

ADV(US$ Mn)

Bloombergticker ETF


Top 20 ETFs in the United States (continued)


Bloombergticker

AUM (US$ Mn)

Feb-11Change

(US$ Mn)

AUM (US$ Mn) Dec-10

-1,198.017,498.416,300.4-1,978.0IWM USiShares Russell 2000 Index Fund

1,145.82,631.53,777.31,026.6MOO USMarket Vectors Agribusiness ETF

1,142.95,849.36,992.2825.5XLK USTechnology Select Sector SPDR Fund

1,112.58,729.29,841.8661.7DIA USSPDR Dow Jones Industrial Average ETF

1,101.54,622.15,723.6747.0EWC USiShares MSCI Canada Index Fund

1,097.612,580.013,677.6410.6IWF USiShares Russell 1000 Growth Index Fund

978.810,697.111,675.9406.7IWD USiShares Russell 1000 Value Index Fund

975.77,503.78,479.4551.7VNQ USVanguard REIT ETF

-916.27,680.86,764.7-588.5GDX USMarket Vectors Gold Miners

906.97,376.78,283.6751.4HYG USiShares iBoxx $ High Yield Corporate

4,883.3

8,131.1

9,332.0

44,569.8

36,923.1

25,799.2

8,396.4

22,069.9

89,915.3

47,551.5

1,273.96,157.31,027.9EWJ USiShares MSCI Japan Index Fund

-1,321.66,809.5-1,107.9FXI USiShares FTSE China 25 Index Fund

1,341.010,673.0731.8IJH USiShares S&P MidCap 400 Index Fund

-1,744.3

2,202.3

2,343.5

2,470.3

3,365.3

4,863.7

-11,130.9

Ranked by largest change in AUM

42,825.5263.3VWO USVanguard MSCI Emerging Markets ETF

39,125.4428.0EFA USiShares MSCI EAFE Index Fund

28,142.7975.9IVV USiShares S&P 500 Index Fund

10,866.71,263.6XLE USEnergy Select Sector SPDR Fund

25,435.21,969.0QQQQ USPowerShares QQQ Trust

94,779.0114.5SPY USSPDR S&P 500

36,420.6-9,210.8EEM USiShares MSCI Emerging Markets

YTD NNA(US$ Mn)ETF

78.210,673.0731.8IJH USiShares S&P MidCap 400 Index Fund

785.99,841.8661.7DIA USSPDR Dow Jones Industrial Average ETF

39.65,462.2636.5VIG USVanguard Dividend Appreciation ETF

11.4909.9632.1VOO USVanguard S&P 500 ETF

89.42,606.1591.2EWG USiShares MSCI Germany Index Fund

59.23,137.0585.3OEF USiShares S&P 100 Index Fund

78.18,479.4551.7VNQ USVanguard REIT ETF

197.71,427.7549.1XOP USSPDR S&P Oil & Gas Exploration & Production

8.1406.5501.8IDX USMarket Vectors Indonesia ETF

39.57,356.4468.0VEU USVanguard FTSE All-World Ex-US Index Fund

7,259.8

5,723.6

8,283.6

6,992.2

28,142.7

3,777.3

6,157.3

12,690.6

10,866.7

25,435.2

AUM (US$ Mn)

Feb-11

107.3744.8JNK USSPDR Barclays Capital High Yield Bond ETF

86.6747.0EWC USiShares MSCI Canada Index Fund

113.1751.4HYG USiShares iBoxx $ High Yield Corporate

217.5

330.7

115.5

246.5

999.6

1,126.6

3,027.7

ADV(US$ Mn)

Feb-11

Ranked by largest YTD net inflows

825.5XLK USTechnology Select Sector SPDR Fund

975.9IVV USiShares S&P 500 Index Fund

1,026.6MOO USMarket Vectors Agribusiness ETF

1,027.9EWJ USiShares MSCI Japan Index Fund

1,222.8EWZ USiShares MSCI Brazil Index Fund

1,263.6XLE USEnergy Select Sector SPDR Fund


YTD NNA (US$ Mn)

Bloombergticker ETF


United States ETF turnover as % of United States equity turnover

Note: Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, NYSE Arca.

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000Ja

n-08

Feb-

08

Mar

-08

Apr

-08

May

-08

Jun-

08

Jul-0

8

Aug

-08

Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb-

09

Mar

-09

Apr

-09

May

-09

Jun-

09

Jul-0

9

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb-

10

Mar

-10

Apr

-10

May

-10

Jun-

10

Jul-1

0

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

ETF turnover (US$ Mn)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

ETF turnover as % of US equity turnover

US ETF turnover (US$ Mn) ETF turnover as % of US equity turnover


Average expenses of ETFs versus open-end mutual funds in the United States

1. As at end February 2010.2. Captured from Morningstar on 15 March 2010.Source: Morningstar, Global ETF Research and Implementation Strategy Team, BlackRock.

60Emerging markets – equity

105Actively managed fixed income160Actively managed international equity146Actively managed domestic equity40Passive/indexed fixed income83Passive/indexed international equity93Passive/indexed domestic equity

Open-end mutual funds2

33Total – all25Total – fixed income ETFs34Total – equity ETFs21Value – equity21Small-cap – equity32Sector – equity22Mid-cap – equity95Leveraged inverse95Leveraged13Large-cap – equity95Inverse42International – equity21Growth – equity

Average TER(s)

22Fixed income

44Custom48Currency57Commodities18Broad market – equity57Active

ETFs1

Average TER (bps)


Short interest: United States listed ETF and HOLDRS short interest

On 26 February 2010, the SEC approved a new rule that places restrictions on short selling a security when it has experienced a price decline of at least 10% in a single day. If this level is reached, short selling is only allowed if the price of the security is above the current national best bid.

Short interest in United States listed ETFs reached the highest ever during 2010.

• Based on data through to February 2011 the average number of ETF shares short during 2011 was 1,675 Mn shares, with an average of 1,703 Mn in 2010 and 1,653 Mn in 2009. The February 2011 short interest level for United States-listed ETFs was 10.2% of shares outstanding or 1,786 Mn shares, up 8.7% from 1,644 Mn in December 2010.

Investors are using ETFs for long/short and hedging strategies.

• At end of February 2011, there were 919 ETFs listed in the United States and 2,557 ETFs worldwide, which provide exposure to equity sectors, styles, countries and regional indices as well as fixed income, commodity indicesand currencies.

Security 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 Total Expense Ratio (TER).

Short interest is often considered an indication of the level of scepticism in the market.

• Short interest data is captured for United States 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.

1,3119.5%1,6752011 avg

1,32810.2%1,786Feb-11

1,14510.8%1,7032010 avg

1,293

948

1,209

1,475

1,283

1,206

1,127

983

S&P 500Index Level

8.9%

12.4%

17.0%

16.1%

13.5%

17.2%

26.3%

27.1%

% of shares outstanding

1,564Jan-11

1,6532009 avg

1,6932008 avg

1,2422007 avg

8372006 avg

7812005 avg

9522004 avg

8122003 avg

Short interest(Mn shares)Date

Note: With short sales, the investor faces the potential for unlimited losses as the security's price rises. Data as at mid February 2011. Source: Regulatory Notice 09-31, Financial Industry Regulatory Authority, SEC, Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.


Short interest: top 20 United States listed ETFs and HOLDRS based on short interest

Note: Data as at mid February 2011. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

34.3%53,95318,489XLY USConsumer Discretionary Select Sector SPDR Fund

24.8%80,36519,906XLV USHealth Care Select Sector SPDR Fund

70.3%29,00020,375TLT USiShares Barclays 20+ Year Treasury Bond Fund

20.1%

2.4%

8.5%

22.1%

4.4%

22.5%

6.5%

142.3%

193.5%

27.7%

109.2%

581.6%

18.7%

20.7%

20.6%

104.2%

37.3%

Shortinterest ratio

(%)

102,022

930,736

264,356

104,476

641,400

139,424

539,400

27,403

23,200

162,750

55,400

12,350

472,295

441,200

800,100

198,350

716,232

Shares outstanding(000’ shares)

20,470

21,895

22,570

23,138

28,010

31,350

35,311

38,985

44,886

45,140

60,518

71,833

88,346

91,182

164,756

206,709

267,094

Short interest(000’shares)

FXI USiShares FTSE/Xinhua China 25 Index Fund

XLP USConsumer Staples Select Sector SPDR Fund

VWO USVanguard Emerging Markets

XLK USTechnology Select Sector SPDR Fund

XLI USIndustrial Select Sector SPDR Fund

EFA USiShares MSCI EAFE Index Fund

XLE USEnergy Select Sector SPDR Fund

EWJ USiShares MSCI Japan Index Fund

KRE USSPDR KBW Regional Banking ETF

XOP USSPDR S&P Oil & Gas Exploration & Production ETF

IYR USiShares Dow Jones U.S. Real Estate Index Fund

XRT USSPDR S&P Retail ETF

XLF USFinancial Select Sector SPDR Fund

QQQQ USPowerShares QQQ Trust

EEM USiShares MSCI Emerging Markets Index Fund

IWM USiShares Russell 2000 Index Fund

SPY USSPDR S&P 500

BloombergtickerName


United States options on ETFs/ETPs

Note: Data as at end February 2011.Source: The Options Clearing Corporation (The OCC), Global ETF Research and Implementation Strategy Team, BlackRock.

• In February 2011, there were 381 options on ETFs/ETPs in the United States, which means that 34% of United States listed ETFs/ETPs had options.

• Options on ETFs offer strategies for managing the risk or expanding the opportunities for profit. Because ETFs are traded like stocks, ETF options are very similar to stock options. Just as stock options settle in shares of stock, ETF options settle in ETFs.

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11

# cleared contracts

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

# cleared transactions

Cleared contracts Cleared transactions


ETP providers in the United States: ranked by assets

Note: Data as at end February 2011. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

-------1---WealthNotes Capital Management

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

0.6%17.8%$0.80.0%0$0.4$0.404.5%$5.617Merrill Lynch

0.4%8.3%$0.72.0%1$1.1$0.6227.5%$9.251Barclays (iPath)1.4%15.6%$2.00.0%0$1.2$0.9511.8%$14.536Deutsche Bank0.3%4.4%$0.80.0%0-$0.1$0.7215.4%$18.94iShares

0.0%2.1%$0.10.0%0$0.3$0.444.1%$5.19United States Commodity Funds

$3.3

-

$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0

$0.1$0.2$0.0$0.2$0.2$0.2

-$0.7

Feb-11NNA

(US$ Bn)

$1.5

-

$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.0$0.1$0.0

$0.1$0.3$0.0$0.5$0.2$0.2

-$3.0

YTD NNA(US$ Bn)

YTD changeFeb-11

0.2%13.1%$0.30.0%012.1%$2.64JPMorgan Chase

2.3%$2.77.0%13116100.0%$122.9198Total

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

0.0%18.0%$0.00.0%000.0%$0.01Citigroup0.0%440.6%$0.0200.0%200.0%$0.03RBS0.0%100.0%$0.0100.0%500.0%$0.05FactorShares0.0%7.7%$0.00.0%000.1%$0.11HSBC/Hang Seng0.0%8.7%$0.00.0%000.1%$0.12Goldman Sachs0.0%79.7%$0.00.0%000.1%$0.16VelocityShares0.0%101.9%$0.0200.0%230.1%$0.13Teucrium Trading0.0%63.6%$0.00.0%000.1%$0.19Barclays Capital0.0%41.5%$0.10.0%000.1%$0.24Morgan Stanley0.0%10.1%$0.00.0%000.2%$0.24Credit Suisse

0.1%29.6%$0.20.0%000.6%$0.71GreenHaven Commodity Services0.3%31.6%$0.40.0%001.4%$1.87Swedish Export Credit Corp0.0%2.7%$0.10.0%0132.1%$2.59Rydex SGI0.4%25.9%$0.516.7%2382.1%$2.614ProShares

0.2%7.5%$0.316.7%1243.1%$3.87ETF Securities


% marketshare

%assets

Assets(US$ Bn)

%ETPs

#ETPs

#planned

%total

Assets(US$ Bn)

#ETPsProvider


Top 25 ETF/ETP providers in the United States: ranked by assets


$0.0

$0.0

$0.1

$0.1

$0.1

$0.2

$0.1

$0.2

$0.4

$0.1

$0.2

$0.4

$0.4

$0.0

$0.5

-$0.4

$0.6

$0.1

-$0.6

$1.0

$1.0

$0.6

$2.5

-$2.3

$1.9

Feb-11NNA

(US$ Bn)

$0.1

$0.0

$0.1

$0.2

$0.2

$0.3

$0.3

$0.2

$0.7

$0.0

$0.2

$0.3

$0.4

-$0.2

$0.9

-$0.2

$1.1

$0.5

-$1.1

$2.0

$1.5

$3.8

$6.7

$0.4

-$1.2

YTD NNA(US$ Bn)

YTD changeFeb-11

0.3%6.2%$9.21.6%1115.0%$157.564Vanguard

0.0%8.6%$0.00.0%0140.0%$0.59Emerging Global Advisors

0.0%10.6%$0.10.0%080.1%$0.66RevenueShares

0.0%29.6%$0.20.0%000.1%$0.71GreenHaven Commodity Services

0.0%29.1%$0.20.0%070.1%$0.93ALPS ETF Trust

0.0%13.0%$0.229.4%5290.1%$1.522Global X Funds

0.0%31.6%$0.40.0%000.2%$1.87Swedish Export Credit Corp

0.0%12.1%$0.30.0%080.2%$2.413PIMCO

0.0%13.1%$0.30.0%010.2%$2.64JPMorgan Chase

0.1%28.6%$0.818.2%200.3%$3.513Charles Schwab Investment Management

0.0%0.0%$0.010.5%4290.3%$3.642Guggenheim Funds

0.0%7.5%$0.316.7%1240.4%$3.87ETF Securities

0.0%2.1%$0.10.0%040.5%$5.19United States Commodity Funds

0.1%17.8%$0.80.0%000.5%$5.617Merrill Lynch

0.0%-1.8%-$0.10.0%01740.6%$6.539Direxion Shares

0.1%22.3%$1.22.3%1150.6%$6.744First Trust Advisors

0.0%1.8%$0.13.0%11080.7%$7.634Rydex SGI

0.0%8.3%$0.72.0%1220.9%$9.251Barclays (iPath)

0.0%3.3%$0.32.3%1721.0%$10.245WisdomTree Investments

-0.1%-3.2%-$0.40.0%001.1%$11.81Bank of New York

0.0%5.5%$1.10.0%0352.0%$21.129Van Eck Associates Corp

0.1%6.9%$1.62.7%31362.4%$25.2115ProShares

0.4%11.6%$6.30.0%0535.7%$60.3147PowerShares/Deutsche Bank

-0.1%3.5%$8.35.4%52923.2%$243.698State Street Global Advisors

-0.9%1.8%$8.30.0%01443.5%$457.8220iShares

% marketshare

%assets

Assets(US$ Bn)

% ETFs/ETPs

# ETFs/ETPs

#planned

%total

Assets(US$ Bn)

# ETFs/ETPsProvider


Top 25 brokers trading US listed ETFs/ETPs: ranked by advertised volume

11.7%-7.8%

134.6%-45.5%-10.1%5.0%5.7%

25.7%0.3%

13.4%31.5%16.4%-33.8%-9.6%-4.2%1.9%-8.7%6.4%-3.6%

210.3%22.0%7.5%-6.3%1.3%

-14.4%-9.9%

% broker advertised

market share

100.0%4.1%0.2%0.3%0.3%0.4%0.5%0.7%0.7%0.9%0.9%0.9%0.9%2.0%2.9%3.6%3.8%4.0%4.0%4.6%4.7%6.5%7.2%9.8%

11.4%12.0%12.7%

% broker advertised

market share

-0.3%8.7%-7.1%

125.9%-46.0%-10.3%4.7%4.7%

25.0%-0.3%13.7%30.9%16.5%-34.1%-9.9%-4.6%1.5%-9.1%6.0%-3.8%

208.7%21.6%7.2%-6.6%1.0%

-14.7%-10.2%

Broker advertised

volume (%)

2.9%14.7%-7.1%

142.9%-44.1%-7.7%8.7%9.1%

28.6%2.2%

20.0%32.4%19.0%-31.6%-7.0%-1.5%5.1%-6.5%9.0%-0.8%

218.8%25.6%10.7%-3.6%4.2%

-12.0%-7.4%

% total exchange

volume

Monthly changeFeb-11

15.9%4.8%1.3%

110.9%1.6%

-46.5%17.0%-8.3%

-11.7%-5.6%

-11.7%-6.1%7.2%-9.1%-8.4%-0.4%-4.7%-5.2%1.4%

-11.2%227.1%

2.5%-4.6%-2.4%-7.0%-3.6%-5.8%

# broker reported trades

(%)

54.4%$662,343.1530,313Total2.2%$27,222.851,597Others0.1%$1,587.577Newedge Group0.2%0.2%0.2%0.3%0.4%0.4%0.5%0.5%0.5%0.5%1.1%1.6%1.9%2.1%2.2%2.2%2.5%2.6%3.5%3.9%5.3%6.2%6.6%6.9%

% total exchange

volume

$2,019.8$2,275.6$2,917.2$3,059.4$4,339.3$4,412.5$5,776.9$5,784.5$6,007.7$6,091.3

$13,112.2$19,511.8$23,543.4$25,166.7$26,479.6$26,559.2$30,530.0$31,038.1$42,981.3$47,933.2$64,638.5$75,614.1$79,700.3$84,040.2

28,392UBS11,253Credit Suisse

124,350Knight Securities

16,365Fidelity Capital Markets16,812Susquehanna Capital Group32,713Goldman Sachs6,871Deutsche Bank Securities

16,837Morgan Stanley10,295JPMorgan Chase Bank

119,489Citadel Securities12,406Barclays Capital10,504Citigroup Global Markets28,493Merrill Lynch

11,978JonesTrading1,543HSBC Bank1,409State Street Bank & Trust Co4,000ConvergEx1,442Bloomberg Tradebook944Jefferies & Co

1,933Instinet13,297GFI Group5,068Royal Bank Of Canada740BTIG

1,505BNP Paribas Securities

Broker advertised

volume (US$ Mn)

# broker reported tradesBroker

Knight Securities 12.7%Credit Suisse 12%UBS 11.4%Merrill Lynch 9.8%Citigroup Global Markets 7.2%Barclays Capital 6.5%Citadel Securities 4.7%JPMorgan Chase Bank 4.6%Morgan Stanley 4%Deutsche Bank Securities 4%Goldman Sachs 3.8%Susquehanna Capital Group 3.6%Fidelity Capital Markets 2.9%BNP Paribas Securities 2%BTIG 0.9%Royal Bank Of Canada 0.9%GFI Group 0.9%Instinet 0.9%Jefferies & Co 0.7%Bloomberg Tradebook 0.7%ConvergEx 0.5%State Street Bank & Trust Co 0.4%HSBC Bank 0.3%JonesTrading 0.3%Newedge Group 0.2%Others 4.1%



ETFs and ETPs listed in Europe

At the end of February 2011, the European ETF industry had 1,116 ETFs with 3,884 listings and assets of US$299.1 Bn, from 40 providers on23 exchanges. This compares to 901 ETFs with 2,490 listings and assets of US$220.1 Bn from 35 providers on 18 exchanges, at the end of February 2010.

11 April 2011 will mark the 11th anniversary of ETFs in Europe.

Assets

• YTD, assets have increased by 5.3% from US$284.0 Bn to US$299.1 Bn, which is less than the 7.3% increase in the MSCI Europe Index in US dollar terms. This compares to a 3.0% decrease in assets over the same period in 2010.

• US$2.1 Bn of net new assets went into European listed ETFs/ETPs in February 2011. US$0.6 Bn net inflows went into equity ETFs/ETPs, of which US$0.9 Bn went into ETFs/ETPs tracking North American indices while ETFs/ETPs tracking emerging market indices saw net outflows of US$0.7 Bn. Fixed income ETFs/ETPs saw net outflows of US$0.4 Bn, of which government bond ETFs/ETPs saw net outflows of US$1.0 Bn while US$0.4 Bn went into money market ETFs/ETPs. US$1.7 Bn net inflows went into commodity ETFs/ETPs, of which US$0.7 Bn went into ETFs/ETPs providing broad commodity exposure and US$0.5 Bn went into ETFs/ETPs providing energy exposure.

• US$6.1 Bn of net new assets went into European listed ETFs/ETPs in 2011 YTD. US$5.4 Bn net inflows went into equity ETFs/ETPs, of which US$2.5 Bn went into ETFs/ETPs tracking North American indices and US$2.0 Bn into ETFs/ETPs tracking European indices. Fixed income ETFs/ETPs saw net outflows of US$0.7 Bn, of which government bond ETFs/ETPs saw net outflows of US$1.7 Bn while US$0.6 Bn went into money market ETFs/ETPs. US$1.4 Bn net inflows went into commodity ETFs/ETPs, of which US$0.9 Bn went into ETFs/ETPs providing broad commodity exposure while ETFs/ETPs providing exposure to precious metals saw US$0.3 Bn net outflows.

• YTD, US$5.4 Bn net new asset flows went into equity ETFs/ETPs, less than the US$6.7 Bn net inflows over the same period in 2010.Net new asset flows into ETFs/ETPs tracking North American indices were US$2.5 Bn YTD, greater than the net inflows of US$0.9 Bnover the same period in 2010. Net inflows into ETFs/ETPs tracking European indices were smaller at US$2.0 Bn YTD versus US$2.1 Bn net inflows over the same period in 2010. Fixed income ETF/ETP net outflows were US$0.7 Bn YTD compared to US$1.2 Bn net inflows over the same period in 2010, and the net new asset inflows into commodity ETFs/ETPs were US$1.4 Bn YTD, greater than the net inflows of US$0.8 Bn over the same period in 2010.

Note: Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, Federation of European Stock Exchanges (FESE).


ETFs and ETPs listed in Europe (continued)

ETFs

• YTD, the number of ETFs have increased by 4.1% with 44 new ETFs launched. This compares to an 8.7% increase over the same periodin 2010 when 72 new ETFs launched.

• The top 100 ETFs, out of 1,085, account for 63.3% of European ETF AUM, while 700 ETFs have less than US$100.0 Mn in assets,554 ETFs have less than US$50.0 Mn in assets and 172 ETFs have less than US$10.0 Mn in assets.

Trading volume

• In February 2011, the ETF average daily trading volume in US dollars increased by 43.4% to US$4.5 Bn compared to December 2010. This compares to average daily trading volume of US$3.1 Bn in February 2010. 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 January 2011, reported European ETF turnover was 5.0% of all European equity turnover, which was less than the 5.1% inDecember 2010.

Exchanges

• YTD, the number of exchanges with official listings has increased from 22 to 23.

ETF providers

• iShares is the largest ETF provider in terms of both number of products and assets, 184 ETFs and US$107.6 Bn respectively, reflecting 36.0% market share; Lyxor Asset Management is second with 156 products, assets of US$53.7 Bn, and 17.9% market share; followedby db x-trackers with 153 ETFs, assets of US$48.6 Bn, and 16.2% market share at the end of February 2011.

• Of the US$1.3 Bn of net new assets in European listed ETFs in February 2011, iShares gathered the largest net inflows with US$1.0 Bn, followed by UBS Global Asset Management with US$0.5 Bn net inflows, while Lyxor Asset Management had the largest net outflowswith US$1.0 Bn.

• YTD, of the US$5.9 Bn net new assets into European listed ETFs, iShares gathered the largest net inflows with US$2.9 Bn net new assets, followed by Source Markets with US$1.2 Bn net inflows, while Lyxor Asset Management had the largest net outflows withUS$1.2 Bn YTD.

Note: Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, Federation of European Stock Exchanges (FESE).


ETFs and ETPs listed in Europe (continued)

ETF providers (continued)

• The top three ETF providers, out of 40, account for 70.2% of European ETF AUM. This compares to 73.5% out of 35 providers, at theend of February 2010.

• YTD, one new provider has entered the industry, launching their first ETF, while three firms plan to launch their first ETFs in Europe inthe future.

Mutual funds

• In Europe, net sales of mutual funds (excluding ETFs) were US$186.5 Bn, while net sales of ETFs domiciled in Europe were US$43.8 Bn during 2010 according to Lipper FMI.

ETPs

• Additionally, there were 535 other ETPs¹ with 1,151 listings, and assets of US$32.5 Bn, from nine providers on eight exchanges. This compares to 185 ETPs with 452 listings and assets of US$15.6 Bn, from four providers, at the end ofFebruary 2010.

ETFs and ETPs

• Combined, there were 1,651 products with 5,035 listings and assets of US$331.6 Bn, from 45 providers on 24 exchanges in Europe.This compares to 1,086 products with 2,942 listings and assets of US$235.7 Bn from 36 providers on 18 exchanges, at the end ofFebruary 2010.




European ETF and ETP asset growth


535

1,116

$32.5

$28.0

$57.7

$210.9

$299.1

Feb-11

$198.5$159.8$96.6$103.5$75.7$49.3$31.0$19.4$10.7$5.7$0.7ETF equity

$26.4$15.2$4.9$3.3$2.0$0.4ETF commodity

$31.3$15.7$7.0$4.9$2.1$1.1ETP total

521

1,072

$57.1

$284.0

2010

278

827

$51.6

$226.9

2009

218

636

$41.1

$142.7

2008

80

423

$21.0

$128.5

2007

32

273

$12.1

$89.7

2006

2

165

$5.2

$54.9

2005

114

$2.9

$34.0

2004

104

$1.0

$20.4

2003

118

$10.7

2002

71

$5.7

2001

# ETPs

6# ETFs

ETF fixed income

$0.7ETF total

2000Assets (US$ Bn)

0

50

100

150

200

250

300

350

Assets US$ Bn

0

200

400

600

800

1,000

1,200

# products



ETF providers in Europe: ranked by AUM

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.2

$0.0

$0.0

$0.6

$0.0

$0.1

$0.1

$0.1

$0.1

$0.1

$0.7

$1.0

$1.4

ADV(US$ Bn)

12

7

8

1

4

53

109

10

50

66

77

41

32

74

57

75

142

267

364

12

294

642

638

804

# totallistings

0.0%5.6%$0.00.0%0$0.0$0.000.0%$0.16JP Morgan Mansart Investments

0.0%20.7%$0.00.0%0$0.0$0.000.1%$0.27Finans Portfoy Yonetimi

$0.0

$0.0

$0.0

$0.1

$0.1

$0.0

$0.1

$0.0

$0.3

$0.0

$0.1

$0.0

$0.3

-$0.8

$0.5

$0.3

$0.1

$0.0

$0.3

-$0.4

-$1.0

$1.0

Feb-11NNA

(US$ Bn)

$0.0

$0.0

$0.0

$0.2

$0.1

$0.0

$0.1

$0.1

$0.3

$0.0

$0.1

$0.2

$1.2

-$0.5

$0.7

$0.9

$0.2

$0.1

$0.4

$0.0

-$1.2

$2.9

YTD NNA(US$ Bn)

YTD changeFeb-11

-0.6%1.4%$0.70.7%11116.2%$48.6153db x-trackers

0.0%-3.9%$0.00.0%000.1%$0.33DnB NOR Asset Management

0.0%0.8%$0.00.0%000.1%$0.31Seligson & Co Fund Management

0.0%4.7%$0.00.0%000.1%$0.33Marshall Wace LLP

0.1%42.2%$0.330.8%460.3%$0.917HSBC/Hang Seng

0.0%18.9%$0.13.8%130.3%$0.927ETF Securities

0.0%2.7%$0.025.0%200.4%$1.210BBVA Asset Management


0.0%10.5%$0.10.0%010.5%$1.419PowerShares

0.1%26.4%$0.4120.0%1200.6%$1.722RBS

0.0%2.7%$0.10.0%011.1%$3.321XACT Fonder

0.0%3.0%$0.10.0%001.5%$4.416Swiss & Global Asset Management

0.1%8.8%$0.50.0%002.0%$6.049EasyETF

0.4%28.5%$1.41.8%1152.1%$6.457Source Markets

-0.2%-1.7%-$0.111.4%452.2%$6.739ETFlab Investment


0.3%17.8%$1.32.2%202.8%$8.494Amundi ETF

0.0%5.2%$0.40.0%003.0%$9.090Commerzbank

-0.1%2.0%$0.20.0%004.0%$12.07Zurich Cantonal Bank

0.0%4.4%$0.77.4%405.5%$16.358Credit Suisse Asset Management

-0.5%2.5%$1.31.3%2017.9%$53.7156Lyxor Asset Management

0.1%5.7%$5.81.7%3236.0%$107.6184iShares

% marketshare

%assets

AUM(US$ Bn)

%ETFs

#ETFs

#planned

%total

AUM(US$ Bn)

#ETFsProvider

continued…


ETF providers in Europe: ranked by AUM (continued)

$4.5

-

-

-

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

ADV(US$ Bn)

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

0.0%-9.4%$0.00.0%0$0.0$0.000.0%$0.011Bizim Menkul Degerler

3,884

-

-

-

1

1

4

1

1

1

1

1

1

2

2

2

1

1

7

5

1

3

# totallistings

$1.3

-

-

-

-

-

-

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

Feb-11NNA

(US$ Bn)

$5.9

-

-

-

-

-

-

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

YTD NNA(US$ Bn)

YTD changeFeb-11

0.0%37.5%$0.00.0%040.0%$0.05ThinkCapital

5.3%$15.14.1%4455100.0%$299.11,116Total

-----1---Qbasis Invest

-----5---Ossiam

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

-----0---Vanguard

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

-----0---Direxion Shares

0.0%0.0%$0.00.0%000.0%$0.01Kuveyt Turk Katilim Bankasi

0.0%0.0%$0.00.0%000.0%$0.01Goldman Sachs Asset Management

0.0%0.0%$0.00.0%000.0%$0.01ESAF

0.0%-6.5%$0.00.0%000.0%$0.01Medvesek Pusnik AM

0.0%-13.0%$0.00.0%000.0%$0.01Garanti Bank

0.0%12.5%$0.00.0%000.0%$0.01Troika Dialog Asset Management

0.0%0.3%$0.00.0%000.0%$0.01Osmosis Investment Management

0.0%4.4%$0.00.0%000.0%$0.02NBG Asset Management

0.0%-6.9%$0.00.0%000.0%$0.02Is Investment

0.0%7.3%$0.00.0%000.0%$0.01OTP Fund Management

0.0%6.3%$0.00.0%000.0%$0.01NCB Investment Services

0.0%3.3%$0.00.0%000.0%$0.07Carnegie Fonder

0.0%14.8%$0.00.0%000.0%$0.11Alpha Asset Management

0.0%100.0%$0.1100.0%300.0%$0.13PIMCO Source

% marketshare

%assets

AUM(US$ Bn)

%ETFs

#ETFs

#planned

%total

AUM(US$ Bn)

#ETFsProvider



European ETF/ETP net new assets by type of exposure

Note: NNA – Net New Assets. Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

continued…

Exposure# ETFs/ETPs

ADV(US$ Mn)

Assets (US$ Mn)

Equity 827 3,890.0 211,782.7 624.0 5,362.5 31,499.0 32,622.8 Europe 479 2,515.8 120,470.0 149.2 1,984.8 7,831.0 18,140.7

Broad 300 1,817.7 104,381.9 (722.6) (196.1) 7,538.9 14,753.7 Consumer Goods/Services 41 132.8 1,700.4 (175.5) (159.7) 162.7 335.4 Energy 13 45.1 1,554.8 253.3 378.6 12.4 322.1 Financials 28 145.3 4,155.6 522.7 1,206.0 (9.6) 825.5 Healthcare 12 31.7 982.7 (29.4) (21.0) (139.5) 145.9 Industrials 13 100.0 697.5 18.6 30.5 28.4 136.6 Information Technology 12 15.1 626.8 100.0 218.8 (33.1) 12.4 Materials 21 147.5 1,937.2 (74.0) (31.5) (91.5) 522.5 Private Equity 1 4.5 235.6 20.7 88.1 64.4 34.2 Real Estate 12 17.1 2,280.9 138.4 221.6 479.3 333.6 Telecommunications 11 28.1 874.9 23.3 65.5 (192.1) 425.0 Utilities 11 29.8 982.4 73.8 183.8 11.9 361.3 Other 4 1.1 59.4 - 0.0 (1.3) (67.4)

North America 85 421.7 25,189.7 862.8 2,455.6 4,794.8 1,561.5 Asia Pacific 60 156.0 14,241.9 (38.1) 437.8 3,691.5 2,662.0 Global 78 192.2 14,348.7 304.6 448.6 2,873.9 2,798.3

NNA (US$ Mn)

YTD-11 NNA(US$ Mn)

2009 NNA(US$ Mn)

Feb-11

2010 NNA(US$ Mn)


European ETF/ETP net new assets by type of exposure (continued)


continued…

Exposure# ETFs/ETPs

ADV(US$ Mn)

Assets (US$ Mn)

Emerging Markets 125 604.4 37,532.3 (654.5) 35.8 12,307.9 7,460.3 Broad - EM 28 181.8 17,765.3 (947.9) (838.0) 7,450.2 3,665.0 Regional - EM 21 104.9 4,090.3 150.4 182.1 965.9 778.8 Country - EM 76 317.8 15,676.7 143.0 691.6 3,891.8 3,016.6

Brazil 10 39.1 2,646.9 (44.2) (76.5) 329.1 811.2 Chile 1 1.0 56.3 - 19.4 41.8 - China 12 37.4 3,189.0 (84.1) (100.4) 427.1 862.9 Egypt - - - - - (9.0) (5.2) Hungary 1 0.0 17.5 0.1 (0.4) (0.6) (0.3) India 8 41.9 2,902.3 100.4 105.9 690.6 616.3 Indonesia - 0.8 - - - - - Kuwait 1 0.1 50.3 - - 14.6 14.5 Malaysia 1 3.1 131.2 (31.6) (10.6) 99.0 10.1 Mexico 2 1.2 58.2 6.4 10.8 41.8 - Poland 2 0.4 90.2 - 5.0 77.5 - Russia 9 91.8 3,057.2 225.4 543.5 951.8 174.2 South Africa 6 7.5 360.4 (29.2) 15.8 87.5 64.3 South Korea 5 24.9 1,217.2 10.5 69.9 488.9 152.3 Taiwan 5 21.6 822.8 (4.9) 81.5 252.5 137.7 Thailand - 0.2 - - - - (5.5) Turkey 12 40.0 731.8 (10.4) (38.0) 215.1 113.3 UAE - - - - - (13.2) 7.2 Vietnam 1 6.8 345.4 4.7 65.7 197.4 63.6

NNA (US$ Mn)

YTD-11 NNA(US$ Mn)

2009 NNA(US$ Mn)

Feb-11

2010 NNA(US$ Mn)


European ETF/ETP net new assets by type of exposure (continued)


Exposure# ETFs/ETPs

ADV(US$ Mn)

Assets (US$ Mn)

Fixed Income 213 435.9 57,663.9 (406.0) (669.1) 8,275.9 9,453.3 Broad 2 2.0 609.3 - 42.1 460.5 102.3 Corporate 16 66.2 10,996.5 47.5 (45.0) 2,400.8 4,770.8 Covered 8 3.6 1,072.8 20.9 28.0 360.3 438.4 Credit Spreads 13 12.0 920.8 4.7 5.1 (25.3) (291.1) Government 138 186.7 29,969.6 (1,037.1) (1,659.7) 5,734.8 6,193.2 High Yield 2 20.6 835.4 170.8 294.1 472.8 - Inflation 16 31.0 4,349.4 53.2 61.3 (122.4) 2,365.8 Money Market 17 110.2 7,251.3 362.7 633.6 (999.2) (4,518.2) Mortgage 1 3.7 1,658.8 (28.6) (28.6) (6.4) 392.1

Commodities 504 514.2 59,599.6 1,705.6 1,361.0 9,403.0 13,657.9 Broad 78 55.1 9,655.6 666.7 944.2 1,707.0 2,985.9 Agriculture 115 55.3 5,209.2 289.0 224.6 (379.6) 1,294.3 Energy 101 113.9 4,859.5 492.5 441.1 510.0 1,834.2 Industrial Metals 76 23.8 2,392.7 27.6 78.1 330.5 343.5 Livestock 23 1.1 150.0 2.5 16.6 14.5 29.4 Precious Metals 111 265.0 37,332.5 227.2 (343.6) 7,220.6 7,170.7

Currency 90 10.2 559.3 17.0 (32.3) 344.7 190.7 Alternative 16 13.5 1,868.0 163.7 118.2 707.7 898.6 Mixed 1 0.4 116.9 - 3.7 35.4 14.8 Total 1,651 4,864.1 331,590.5 2,104.4 6,144.1 50,265.6 56,838.1

NNA (US$ Mn)

YTD-11 NNA(US$ Mn)

2009 NNA(US$ Mn)

Feb-11

2010 NNA(US$ Mn)


STOXX 600 Sector ETF net flows: week ending 25 February 2011

Note: 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 from30 December 2010 to 25 February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

• The week ending 25 February saw US$201.3 Mn net outflows from STOXX Europe 600 sector ETFs.

• The largest sector ETF net outflows last week were in basic resources with US$95.7 Mn followed by financial services with US$74.5 Mn net outflows while oil and gas experienced net inflows of US$117.0 Mn.

• YTD, STOXX Europe 600 sector ETFs have seen US$1,476.5 Mnnet inflows.

• Banks has seen the largest net inflows with US$580.2 Mn, followed by oil and gas with US$338.5 Mn net inflows while chemicals experienced the largest net outflows with US$100.6 Mn.

#stocks

%weight Weekly Rank YTD Rank 25-Feb-11

YTD %change

Automobiles and parts SXAR 14 2.3% -2.6% 14 4.1% 11 389.4 394.6 1.6% 11.0 -25.7 -49.6 -11.9

Banks SX7R 52 15.3% -2.9% 16 15.6% 2 971.6 2,078.1 60.7% 32.9 -33.2 286.1 580.2

Basic resources SXPR 31 5.6% -1.8% 10 -1.0% 18 873.8 1,416.6 4.4% 36.3 -95.7 20.3 78.1

Chemicals SX4R 23 4.3% -2.7% 15 1.5% 15 169.2 179.8 -34.9% 2.8 -10.7 -76.6 -100.6

Construction and materials SXOR 27 2.6% -1.8% 9 6.0% 10 126.9 315.9 17.4% 3.4 11.2 16.8 28.3

Financial services SXFR 30 1.5% -2.9% 17 6.2% 9 63.1 210.1 134.1% 1.0 -74.5 -2.4 117.5

Food and beverage SX3R 28 6.9% 0.4% 1 -1.3% 19 293.1 352.0 -9.0% 2.7 27.5 -46.8 -29.8

Healthcare SXDR 34 9.2% -0.9% 4 3.6% 13 516.1 852.4 0.4% 6.6 -35.1 -35.3 -28.4

Industrial goods and services SXNR 93 9.6% -1.6% 7 3.8% 12 452.2 575.3 2.9% 10.3 -4.9 -7.9 -2.6

Insurance SXIR 33 5.6% -3.0% 18 17.6% 1 320.9 913.8 64.3% 11.2 -0.4 81.0 246.8

Media SXMR 28 2.3% -1.4% 5 7.2% 7 156.4 148.6 -4.9% 0.9 -0.4 -11.1 -18.9

Oil and gas SXER 34 8.7% 0.2% 2 11.4% 3 828.6 1,431.5 47.0% 19.1 117.0 227.3 338.5

Personal and household goods SXQR 28 5.4% -1.4% 6 1.2% 16 232.6 343.3 4.7% 3.6 8.0 28.3 12.2

Real estate SX86R 21 1.1% -0.1% 3 6.5% 8 35.6 65.5 6.5% 0.5 2.5 -0.1 0.0

Retail SXRR 25 3.6% -1.8% 8 2.0% 14 125.4 188.9 -25.6% 1.3 -19.3 -50.4 -70.9

Technology SX8R 26 2.9% -2.1% 12 10.9% 4 173.5 407.4 93.6% 3.2 -24.2 57.6 167.8

Telecommunications SXKR 20 6.0% -2.2% 13 7.9% 6 340.8 781.0 13.6% 4.2 -14.0 -5.9 38.1

Travel and leisure SXTR 22 1.3% -4.5% 19 0.8% 17 81.5 116.5 -18.5% 3.4 -5.6 -27.8 -27.7

Utilities SX6R 31 5.7% -1.9% 11 8.3% 5 454.9 917.2 30.7% 5.2 -23.8 54.5 159.8

Total 600 100.0% -1.6% 6.8% 6,605.7 11,688.6 22.5% 159.5 -201.3 457.9 1,476.5

Sector Ticker

STOXX 600ETF

5-day ADV(US$ Mn)

YTD ETF net flows (US$ Mn)

US$ total return performance

Weekly ETF net flows(US$ Mn)

MTD ETF net flows (US$ Mn)

ETF AUM (US$ Mn)Futures open

interest (US$ Mn)


STOXX Europe 600 sector ETF net flows, history

Note: Data as at 25 February 2011Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

-1,000

-800

-600

-400

-200

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

01-J

an-1

0

29-J

an-1

0

26-F

eb-1

0

26-M

ar-1

0

23-A

pr-1

0

21-M

ay-1

0

18-J

un-1

0

16-J

ul-1

0

13-A

ug-1

0

10-S

ep-1

0

08-O

ct-1

0

05-N

ov-1

0

03-D

ec-1

0

31-D

ec-1

0

28-J

an-1

1

25-F

eb-1

1

Net flows (US$ Mn)

-1,000

-800

-600

-400

-200

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Net flows (US$ Mn)

Weekly net flows (US$ Mn) YTD 2010 net flows (US$ Mn) YTD 2011 net flows (US$ Mn)


European leveraged and inverse ETF/ETP net new assets by type of exposure


Exposure# ETFs/ETPs

ADV(US$ Mn)

Assets (US$ Mn)

Leveraged 82 297.1 3,333.0 40.2 (518.0) 708.7 1,229.8 Equity 30 247.4 2,307.0 (92.3) (617.2) 346.2 765.4

Europe 27 242.9 2,229.6 (93.6) (627.4) 335.8 751.6 North America 3 4.5 77.4 1.3 10.1 10.4 13.7

Commodities 37 49.4 966.8 131.6 98.3 305.7 464.5 Currency 14 0.2 3.8 0.8 1.0 0.2 Fixed Income 1 0.1 55.4 - - 56.6

Inverse 121 128.0 4,340.6 42.1 116.4 892.9 2,763.1 Equity 37 98.2 2,226.3 (21.1) (12.9) (18.5) 1,713.6

Asia Pacific 1 1.0 24.2 (0.3) 3.6 16.9 8.6 Europe 33 89.8 1,995.5 (23.4) (33.6) (90.0) 1,537.4 Emerging markets 1 0.9 20.2 11.2 19.9 - 167.6 North America 2 6.6 186.3 (8.5) (2.8) 54.6

Commodities 35 15.1 390.4 41.8 85.6 111.2 197.7 Currency 29 6.0 230.2 7.0 49.0 169.0 22.5 Fixed Income 19 8.7 1,485.2 14.4 (5.3) 650.0 801.4 Alternative 1 - 8.4 - - (18.8) 27.9

Leveraged Inverse 41 178.6 1,899.3 41.2 271.2 706.3 958.1 Equity 22 170.1 1,508.8 36.4 265.3 375.7 958.1

Europe 21 169.5 1,498.6 33.1 261.9 364.4 958.1 North America 1 0.6 10.2 3.3 3.3 11.2 -

Fixed Income 2 8.1 369.4 - - 329.2 Currency 14 0.4 9.2 4.7 5.9 1.5 Commodities 3 - 11.8 - - - -

Total 244 603.7 9,572.9 123.4 (130.4) 2,307.8 4,951.0

YTD-11 NNA(US$ Mn)

2009 NNA(US$ Mn)

NNA (US$ Mn)

Feb-11

2010 NNA(US$ Mn)



Types of ETF exposure in Europe: ranked by AUM

ETFs should be viewed as a tool for both active and passive managers.

$4.5

$0.0

$0.0

$0.2

$0.2

$0.0

$0.1

$0.2

$0.4

$0.0

$0.0

$0.1

$0.1

$0.7

$0.1

$0.3

$0.3

$0.5

$0.6

$0.7

$3.4

ADV(US$ Bn)

5.6%$2.5215.6%$46.6108Country exposure Europe

6.5%$12.61968.9%$206.0736Equity – Total

30.7%$0.100.1%$0.212US sector exposure

23.2%$0.500.9%$2.619Eurozone sector exposure

11.4%$0.732.2%$6.646Style

8.1%$0.924.1%$12.466Global exposure

21.9%$2.204.2%$12.5143European sector exposure

8.9%$1.224.7%$14.256Regional exposure Europe

5.3%$1.026.3%$18.975International

18.3%$3.236.9%$20.754Country exposure United States

6.5%$2.1011.3%$33.840Regional Exposure Eurozone

-4.3%-$1.7412.5%$37.4117Emerging markets

5.3%

5.2%

-11.0%

14.2%

-12.9%

11.7%

4.3%

6.6%

0.9%

%AUM

100.0%

0.0%

0.1%

0.6%

0.5%

0.7%

0.9%

9.3%

19.0%

%total

$15.144$299.11,116Total

$0.00$0.14Mixed (equity and fixed income)

$0.00$0.34Currency

$0.22$1.718Leveraged inverse

-$0.25$1.625Leveraged

$0.22$2.113Alternative

$0.13$2.650Inverse

$1.72$27.869Commodities


AUM(US$ Bn)

#ETFs

AUM(US$ Bn)

#ETFsType of exposure

YTD changeFeb-11

Fixed income 19.0%Country exposure Europe – equity 15.6%Emerging markets – equity 12.5%Regional Exposure Eurozone – equity 11.3%Commodities 9.3%Country exposure United States – equity 6.9%International – equity 6.3%Regional exposure Europe – equity 4.7%European sector exposure – equity 4.2%Global exposure – equity 4.1%Style – equity 2.2%Inverse 0.9%Eurozone sector exposure – equity 0.9%Alternative 0.7%Leveraged inverse 0.6%Leveraged 0.5%Currency 0.1%US sector exposure – equity 0.1%Mixed (equity & fixed income) 0.0%


Index providers in Europe: ranked by AUM


$4.5

$0.4

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.1

$0.2

$0.2

$0.1

$0.0

$0.1

$0.3

$0.1

$0.4

$0.4

$1.3

$0.9

ADV(US$ Bn)

6.8%$0.301.8%$5.332NASDAQ OMX

5.3%$1.157.2%$21.689FTSE

6.4%$1.769.4%$28.248Deutsche Boerse

9.0%$4.4417.7%$52.8221STOXX

2.8%$1.9723.7%$71.0251MSCI

30.2%$0.200.3%$0.83Nikkei

13.8%$0.110.3%$0.95Topix

-6.8%-$0.100.6%$1.86Hang Seng

12.6%$0.631.8%$5.233Dow Jones

-0.4%$0.002.7%$8.033NYSE Euronext

7.8%$0.602.9%$8.719Barclays Capital

-1.6%-$0.102.9%$8.817SIX Swiss Exchange

-1.6%-$0.203.1%$9.329EuroMTS

16.6%$2.255.1%$15.460S&P

-0.3%-$0.137.1%$21.1105Markit

5.3%

5.7%

4.8%

45.6%

18.1%

33.8%

%AUM

100.0%

13.1%

0.0%

0.1%

0.1%

0.2%

%total

$15.144$299.11,116Total

$2.18$39.3155Other

$0.00$0.01Intellidex

$0.10$0.23S-Network

$0.00$0.22Structured Solutions

$0.10$0.54Russell

AUM(US$ Bn)

#ETFs

AUM(US$ Bn)

#ETFsIndex provider

YTD changeFeb-11

MSCI 23.7%STOXX 17.7%Deutsche Boerse 9.4%FTSE 7.2%Markit 7.1%S&P 5.1%EuroMTS 3.1%SIX Swiss Exchange 2.9%Barclays Capital 2.9%NYSE Euronext 2.7%NASDAQ OMX 1.8%Dow Jones 1.8%Hang Seng 0.6%Topix 0.3%Nikkei 0.3%Russell 0.2%Structured Solutions 0.1%S-Network 0.1%Intellidex 0.0%Other 13.1%


Top 20 ETFs in Europe

France

UK

Germany

Switzerland

Germany

Germany

Switzerland

UK

France

Germany

Germany

Germany

Germany

Germany

UK

Germany

UK

Switzerland

France

UK

Countrylisted

81.98174,385.6XDAX GYdb x-trackers DAX ETF

53.09394,009.4CAC FPLyxor ETF CAC 40

29.31,0213,675.3IWRD LNiShares MSCI World

10.51483,595.6CSSMI SWCS ETF (CH) on SMI

71.11,6513,155.7XESX GYdb x-trackers Euro Stoxx 50 ETF

27.08252,631.5XMWO GYdb x-trackers MSCI World TRN ETF

18.862,545.9ZSIL SWZKB Silver ETF (CHF)

11.23512,362.3XMUS GYdb x-trackers MSCI USA TRN ETF

14.91,2962,306.0IJPN LNiShares MSCI Japan

28.41,7992,253.5INR FPLyxor ETF MSCI India

1,803

175

1,332

1,741

8,663

1,180

1,484

9

2,623

7,905

ADV(‘000

shares)

75.14,388.9EUN2 GYiShares EURO STOXX 50

28.94,636.6IBCS GYiShares Markit iBoxx Euro Corporate

55.45,072.0XMEM GYdb x-trackers MSCI Emerging Market TRN

73.9

84.2

109.5

65.0

20.7

109.7

186.9

ADV(US$ Mn)


5,591.2SX5EEX GYiShares EURO STOXX 50 (DE)

6,049.2ISF LNiShares FTSE 100

6,296.6DAXEX GYiShares DAX (DE)

6,488.8IEEM LNiShares MSCI Emerging Markets

7,689.0ZGLD SWZKB Gold ETF

8,463.1MSE FPLyxor ETF Euro STOXX 50

9,388.3IUSA LNiShares S&P 500

AUM(US$ Mn)

Bloombergticker ETF

UK

France

Germany

Germany

France

UK

France

Germany

Germany

Germany

Germany

Germany

UK

UK

Germany

UK

Germany

Germany

France

UK

Countrylisted

5,591.21,74173.9SX5EEX GYiShares EURO STOXX 50 (DE)

3,155.71,65171.1XESX GYdb x-trackers Euro Stoxx 50 ETF

1,853.829470.7XEON GYdb x-trackers II EONIA Total Return Index

352.55,34669.2LVC FPLyxor ETF Leverage CAC 40

6,488.81,48465.0IEEM LNiShares MSCI Emerging Markets

391.31,15056.1BX4 FPLyxor ETF XBEAR CAC 40

5,072.01,33255.4XMEM GYdb x-trackers MSCI Emerging Market TRN

1,258.454553.6LYXDAX GYLyxor ETF DAX

4,009.493953.0CAC FPLyxor ETF CAC 40

534.625852.8IEER LNiShares MSCI Eastern Europe 10/40

1,803

146

431

607

817

8,663

556

1,180

2,623

7,905

ADV(‘000

shares)

4,388.975.1EUN2 GYiShares EURO STOXX 50

231.377.2XPPS GYSTOXX 600 Optimised Basic Resources Source

1,104.681.6IWDP LNiShares FTSE Developed Markets Property

1,914.6

4,385.6

6,049.2

245.3

6,296.6

8,463.1

9,388.3

AUM(US$ Mn)


81.6INAA LNiShares MSCI North America

81.9XDAX GYdb x-trackers DAX ETF

84.2ISF LNiShares FTSE 100

96.9XNPS GYSTOXX 600 Optimised Industrial Goods & Services

109.5DAXEX GYiShares DAX (DE)

109.7MSE FPLyxor ETF Euro STOXX 50

186.9IUSA LNiShares S&P 500

ADV(US$ Mn)

Bloombergticker ETF

Note: AUM reflects total fund AUM. ADV reflects total of all exchange listings, share classes and OTC volumes. NNA reflects the total fund NNA. Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.


Top 20 ETFs in Europe (continued)

14.5901.5220.0IUKD LNiShares FTSE UK Dividend Plus

23.41,653.7207.2CSH FPLyxor ETF Euro Cash (EONIA)

40.1349.9205.2X7PS GYSTOXX 600 Optimised Banks Source ETF

6.31,096.2201.2EBMMEX GYiShares eb.rexx Money Market (DE)

30.6567.2191.7RDXS LNRDX Source ETF

23.3367.1174.2XEPS GYSTOXX 600 Optimised Oil & Gas Source ETF

9.0442.1167.0SX7PEX GYiShares STOXX Europe 600 Banks (DE)

24.1185.9165.2IEUA LNiShares EURO STOXX 50 (Acc)

17.5642.0159.8BNK FPLyxor ETF Stoxx Europe 600 Banks

3.1579.0156.9IBGM LNiShares BarCap Euro Government Bond 7-10

1,606.4

5,591.2

1,688.2

915.3

1,641.6

781.1

299.1

1,877.0

4,385.6

9,388.3

AUM (US$ Mn)

30.1227.0RUS FPLyxor ETF Russia (DJ RusIndex Titans 10)

73.9239.5SX5EEX GYiShares EURO STOXX 50 (DE)

15.1243.1CRB FPLyxor ETF Commodities CRB

6.9

10.2

17.3

7.5

11.7

81.9

186.9

ADV (US$ Mn)

Ranked by largest YTD net inflows

270.9CSEMU SWCS ETF (IE) on MSCI EMU

275.3USACHA SWUBS-ETF MSCI USA

288.7IHYG LNiShares Markit iBoxx Euro High Yield Bond

296.5MPFE GYMAN GLG Europe Plus Source ETF

306.7SXXPIEX GYiShares STOXX Europe 600 (DE)

466.0XDAX GYdb x-trackers DAX ETF

1,119.0IUSA LNiShares S&P 500

YTD NNA (US$ Mn)

Bloombergticker ETF

Bloombergticker

AUM (US$ Mn)

Feb-11Change

(US$ Mn)

AUM(US$ Mn) Dec-10

-367.41,237.7870.3-424.7XSX6 GYdb x-trackers DJ STOXX 600

333.3582.0915.3270.9CSEMU SWCS ETF (IE) on MSCI EMU

-332.96,821.76,488.842.6IEEM LNiShares MSCI Emerging Markets

-324.3676.8352.5-384.0LVC FPLyxor ETF Leverage CAC 40

-311.12,564.52,253.543.3INR FPLyxor ETF MSCI India

304.1477.0781.1288.7IHYG LNiShares Markit iBoxx Euro High Yield Bond

299.10.0299.1296.5MPFE GYMAN GLG Europe Plus Source ETF

-291.72,264.41,972.6-191.7IFFF LNiShares MSCI AC Far East ex-Japan

-291.71,597.91,306.2-329.8MTA FPLyxor ETF EuroMTS 1-3Y

291.34,097.54,388.9-34.9EUN2 GYiShares EURO STOXX 50

5,917.7

1,305.3

1,493.9

1,241.5

1,204.9

2,120.3

5,030.7

3,693.1

6,263.3

7,905.8

379.06,296.6101.1DAXEX GYiShares DAX (DE)

383.01,688.2243.1CRB FPLyxor ETF Commodities CRB

383.11,877.0306.7SXXPIEX GYiShares STOXX Europe 600 (DE)

400.1

401.5

-421.7

560.4

692.6

-1,191.2

1,482.5

Ranked by largest change in AUM

1,641.6275.3USACHA SWUBS-ETF MSCI USA

1,606.4227.0RUS FPLyxor ETF Russia (DJ RusIndex Titans 10)

1,698.6-584.7ETFSX5E GYETFlab EURO STOXX 50

5,591.2239.5SX5EEX GYiShares EURO STOXX 50 (DE)

4,385.6466.0XDAX GYdb x-trackers DAX ETF

5,072.0-879.5XMEM GYdb x-trackers MSCI Emerging Market TRN

9,388.31,119.0IUSA LNiShares S&P 500

YTD NNA(US$ Mn)ETF

Note: AUM reflects total fund AUM. ADV reflects total of all exchange listings, share classes and OTC volumes. NNA reflects the total fund NNA. Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.


European ETF turnover as % of European equity turnover

Note: European equity turnover from main market and multilateral trading facilities includes electronic order book equity trading, off-electronic order book equity trading, reporting transactions anddark pool equity trading. Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, Federation of European Stock Exchanges (FESE).

0

20,000

40,000

60,000

80,000

100,000

120,000

Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb-

09

Mar

-09

Apr

-09

May

-09

Jun-

09

Jul-0

9

Aug

-09

Sep

-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10

Feb-

10

Mar

-10

Apr

-10

May

-10

Jun-

10

Jul-1

0

Aug

-10

Sep

-10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Feb-

11

ETF turnover (US$ Mn)

0%

1%

2%

3%

4%

5%

6%

7%

ETF turnover as % of European equity turnover

ETF turnover (US$ Mn) ETF turnover as % of European equity turnover


1. As at end February 2010. 2. Captured from Morningstar on 15 March 2010.Source: Morningstar, Global ETF Research and Implementation Strategy Team, BlackRock.

Average expenses of ETFs versus open-end mutual funds in Europe

100Actively managed fixed income176Actively managed international equity180Actively managed domestic equity49Passive/indexed fixed income78Passive/indexed international equity91Passive/indexed domestic equity

Open-end mutual funds2

52United States sector exposure – equity

41Inverse

38Country exposure United States – equity30Country exposure Europe – equity

35Total – all17Total – fixed income ETFS40Total – equity ETFs

37Style – equity23Regional exposure Eurozone – equity38Regional exposure Europe – equity72Mixed61Leveraged inverse59Leveraged

56International – equity49Global exposure – equity17Fixed income42Eurozone sector exposure – equity

Average TER(s)

35European sector exposure – equity69Emerging markets – equity30Currency

44Commodities25Alternative

ETFs1

Average TER (bps)



ETP providers in Europe: ranked by assets

-------1----Credit Suisse

0.1%28.5%$0.00.0%0$0.0$0.000.4%$0.13213Barclays (iPath)

1,151

-

3

1

1

6

8

33

70

69

180

44

704

# totallistings

0.0%2.3%$0.00.0%0$0.0$0.000.6%$0.218RBS

0.0%3.6%$0.00.0%0$0.0$0.000.6%$0.23Lyxor

0.0%-1.9%$0.00.0%0$0.0$0.000.2%$0.11Standard Commodities

-------0---iShares

-------0---State Street Global Advisors

-------0---Merrill Lynch

$0.8

-

$0.1

$0.2

$0.0

$0.0

$0.5

Feb-11NNA

(US$ Bn)

$0.3

-

$0.0

$0.2

$0.0

$0.0

$0.0

YTD NNA(US$ Bn)

-----4---GAM Holding

-0.1%0.3%$0.00.0%003.7%$1.228Source Markets

0.7%23.1%$0.30.0%004.3%$1.432db ETC

535

180

42

218

#ETPs

0.7%

0.4%

-1.7%

% marketshare

2.7%

1.1%

0.0%

5.8%

%ETPs

36

0

0

31

#planned

3.8%

11.0%

6.8%

1.2%

%assets

100.0%

11.1%

13.3%

66.0%

%total

$1.214$32.5Total

$0.42$3.6UBS AG

$0.30$4.3Societe Generale

$0.312$21.4ETF Securities

Assets(US$ Bn)

#ETPs

Assets(US$ Bn)Provider

YTD changeFeb-11


Top 25 ETF/ETP providers in Europe: ranked by assets


0.1%42.2%$0.330.8%4$0.2$0.160.3%$0.95317HSBC/Hang Seng

0.0%4.4%$0.77.4%4$0.4$0.304.9%$16.329458Credit Suisse Asset Management

8

8

1

4

10

51

66

110

41

180

44

32

74

75

127

142

267

364

12

813

711

638

805

# totallistings

0.0%3.6%$0.00.0%0$0.0$0.000.1%$0.23Lyxor

0.0%-3.9%$0.00.0%0$0.0$0.000.1%$0.33DnB NOR Asset Management

$0.0

$0.0

$0.0

$0.1

$0.0

$0.3

$0.0

$0.0

$0.0

$0.1

$0.0

-$0.8

$0.3

$0.5

$0.3

$0.1

$0.0

$0.6

-$0.1

-$1.0

$1.0

Feb-11NNA

(US$ Bn)

$0.0

$0.0

$0.0

$0.1

$0.1

$0.3

$0.0

$0.0

$0.0

$0.1

$0.2

-$0.5

$1.2

$0.7

$0.9

$0.2

$0.1

$0.1

$0.2

-$1.2

$2.9

YTD NNA(US$ Bn)

YTD changeFeb-11

-0.5%1.9%$0.90.5%11115.1%$50.0185db x-trackers/db ETC

0.0%0.8%$0.00.0%000.1%$0.31Seligson & Co Fund Management

0.0%4.7%$0.00.0%000.1%$0.33Marshall Wace LLP

0.0%2.7%$0.025.0%200.3%$1.210BBVA Asset Management


0.0%10.5%$0.10.0%010.4%$1.419PowerShares

0.1%23.6%$0.442.9%1200.6%$1.940RBS

0.0%2.7%$0.10.0%011.0%$3.321XACT Fonder

0.1%11.0%$0.41.1%201.1%$3.6180UBS AG

0.0%6.8%$0.30.0%001.3%$4.342Societe Generale

0.0%3.0%$0.10.0%001.3%$4.416Swiss & Global Asset Management

0.1%8.8%$0.50.0%001.8%$6.049EasyETF

-0.1%-1.7%-$0.111.4%452.0%$6.739ETFlab Investment

0.3%23.0%$1.41.2%1152.3%$7.685Source Markets


0.3%17.8%$1.32.2%202.5%$8.494Amundi ETF

0.0%5.2%$0.40.0%002.7%$9.090Commerzbank

-0.1%2.0%$0.20.0%003.6%$12.07Zurich Cantonal Bank

-0.2%1.8%$0.45.6%13346.7%$22.3245ETF Securities

-0.4%2.5%$1.31.3%2016.2%$53.7156Lyxor Asset Management

0.2%5.7%$5.81.7%3232.5%$107.6184iShares

% marketshare

%assets

Assets(US$ Bn)

% ETFs/ETPs

# ETFs/ETPs

#planned

%total

Assets(US$ Bn)

# ETFs/ETPsProvider


Top 25 brokers trading European listed ETFs/ETPs: ranked by traded volume

-6.7%-73.4%-43.7%1.1%

-14.2%-39.2%52.2%21.0%41.1%

245.4%-25.1%6.0%

18.2%50.9%5.9%-4.9%

-50.2%-7.3%43.5%1.5%-4.0%9.7%

24.5%13.8%30.1%25.6%-22.3%

Broker advertised

volume (%)

-71.5%-39.7%8.3%-8.0%

-34.9%63.1%29.7%51.2%

270.0%-19.8%13.5%26.6%61.7%13.5%1.9%

-46.6%-0.7%53.8%8.8%2.9%

17.5%33.4%22.0%39.4%34.6%-16.8%

% broker advertised

market share

Monthly changeFeb-11

-2.5%-9.6%-4.8%-9.1%-1.8%-5.2%

-39.8%-9.9%23.9%31.3%-1.6%-5.1%6.2%

50.6%14.2%-3.3%

-33.4%2.3%

29.2%-12.8%-14.6%1.3%-6.7%5.2%

21.6%-10.0%4.7%

# broker reported trades

(%)

100.0%$53,020 44,958 Total3.4%$1,785 3,077 Others0.3%$177 60 Svenska Handelsbanken London0.5%0.5%0.5%0.6%1.0%1.0%1.1%1.2%1.3%1.5%1.5%1.6%3.2%3.5%4.1%5.4%5.4%6.6%6.8%6.9%8.5%9.7%

10.5%13.6%

% broker advertised

market share

$243 $248 $257 $344 $517 $539 $582 $622 $674 $776 $785 $852

$1,701 $1,872 $2,148 $2,860 $2,884 $3,505 $3,603 $3,638 $4,481 $5,154 $5,543 $7,229

1,283 Morgan Stanley2,068 Goldman Sachs International5,251 Deutsche Bank Securities

1,539 Nomura International4,044 Winterflood Securities725 Labranche Structured Products

1,733 Citigroup Global Markets952 JPMorgan Chase Bank

2,117 UniCredit4,194 Merrill Lynch960 Credit Suisse

6,260 CA Cheuvreux1,486 Societe Generale

1,099 Enskilda Securities55 Newedge Group

237 Carnegie59 Exane

712 RBS290 Macquarie Group105 Barclays Capital

2,337 HSBC Bank111 UBS

2,975 Peel Hunt1,229 Knight Securities

Broker advertised

volume (US$ Mn)

# broker reported tradesBroker


Deutsche Bank Securities 13.6%Goldman Sachs International 10.5%

Morgan Stanley 9.7%Societe Generale 8.5%CA Cheuvreux 6.9%Credit Suisse 6.8%

Merrill Lynch 6.6%UniCredit 5.4%JPMorgan Chase Bank 5.4%Citigroup Global Markets 4.1%

Labranche Structured Products 3.5%Winterflood Securities 3.2%Nomura International 1.6%Knight Securities 1.5%

Peel Hunt 1.5%UBS 1.3%HSBC Bank 1.2%

Barclays Capital 1.1%Macquarie Group 1.0%RBS 1.0%Exane 0.6%

Carnegie 0.5%Newedge Group 0.5%Enskilda Securities 0.5%Svenska Handelsbanken London 0.3%

Others 3.4%


ETFs and ETPs listed in Asia Pacific (ex-Japan)

At the end of February 2011, the Asia Pacific (ex-Japan) ETF industry had 217 ETFs with 324 listings and assets of US$54.0 Bn, from 62 providers on 13 exchanges. This compares to 138 ETFs with 226 listings and assets of US$38.4 Bn, from 49 providers on 13 exchanges, at the end of February 2010.

27 August 2011 will mark the 10th anniversary of ETFs in Australia.

Assets

• YTD, assets have increased by 1.4% from US$53.3 Bn to US$54.0 Bn, compared to the 3.3% fall in the MSCI AC Asia Pacific ex-Japan Index in US dollar terms. This compares to a decrease in assets of 1.4% over the same period in 2010.

ETFs

• YTD, the number of ETFs increased by 8.5% with 17 new ETFs launched. This compares to a 6.2% increase over the same period in 2010, when eight new ETFs launched.

Trading volume

• In January 2011, the ETF average daily trading volume in US dollars increased by 15.9% to US$0.9 Bn, compared to December 2010. This compares to average daily trading volume of US$0.7 Bn in February 2010.

ETF providers

• State Street Global Advisors is the largest ETF provider in terms of assets with US$12.3 Bn, in eight ETFs, reflecting 22.7% market share; iShares is second with 19 ETFs, assets of US$9.9 Bn, and 18.4% market share; followed by HSBC/Hang Seng with four ETFs, assets of US$6.9 Bn and 12.8% market share, at the end of February 2011.

• YTD, three new providers have entered the industry launching their first ETF, while eight firms plan to launch their first ETFs in the future.

Note: Data as at end February 2011. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg


ETFs and ETPs listed in Asia Pacific (ex-Japan) (continued)

Mutual funds

• During 2010, according to Strategic Insight, net sales of mutual funds (excluding ETFs) were minus US$72.4 Bn in Asia Pacific(ex-Japan), while net sales of ETFs domiciled in Asia Pacific (ex-Japan) were positive US$8.7 Bn.

ETPs

• Additionally, there were 23 other ETPs1 with 26 listings and assets of US$1.4 Bn from 15 providers onfive exchanges. This compares to 12 ETPs with 15 listings and assets of US$0.9 Bn from eight providers on five exchanges at the endof February 2010.


Note: Data as at end February 2011. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg


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


23

217

$1.4

$54.0

Feb-11

23

200

$1.4

$53.3

2010

12

132

$0.8

$38.5

2009

6

96

$0.5

$23.8

2008

4

68

$0.1

$27.0

2007

49

$18.1

2006

32

$10.5

2005

27

$8.6

2004

20

$6.6

2003

11

$3.8

2002

4

$3.7

2001

# ETPs

# ETFs

ETP assets

ETF assets

Assets (US$ Bn)

0

10

20

30

40

50

60

Assets (US$ Bn)

0

50

100

150

200

250

# products


ETF providers in Asia Pacific (ex-Japan): ranked by AUM


$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.1

$0.0

$0.0

$0.0

$0.1

$0.1

$0.1

$0.0

$0.2

$0.1

ADV(US$ Bn)

0.0%-1.9%$0.00.0%000.5%$0.355Smartshares Limited

1

1

2

8

6

4

4

1

1

19

2

33

11

65

6

2

11

17

2

2

6

43

10

# totallistings

YTD changeFeb-11

0.1%2.2%$0.20.0%0012.8%$6.94HSBC/Hang Seng

0.5%100.0%$0.3100.0%100.5%$0.31GTJA Allianz

0.0%-2.6%$0.00.0%010.5%$0.31Bosera Asset Management

0.0%0.1%$0.00.0%000.5%$0.32DBS Asset Management

0.0%-1.0%$0.00.0%060.5%$0.38Benchmark Asset Management

-0.1%-11.2%$0.00.0%000.6%$0.36Korea Investment Trust Management

0.5%444.3%$0.333.3%100.7%$0.44Da Cheng International Asset Management

0.0%1.0%$0.00.0%000.7%$0.44KB Asset Management

0.0%8.0%$0.00.0%010.7%$0.41Huatai-PineBridge Fund Management

0.0%0.4%$0.00.0%001.1%$0.61Bank Of Communications

0.2%26.3%$0.118.8%301.2%$0.619Mirae Asset MAPS Global Investments

0.0%1.9%$0.00.0%001.2%$0.72China Southern Fund Management

-0.5%-25.7%-$0.30.0%011.3%$0.72Lyxor Asset Management

-0.2%-8.0%-$0.110.0%161.6%$0.911Woori Asset Management

0.0%4.0%$0.00.0%001.9%$1.022db x-trackers

0.2%9.7%$0.166.7%202.0%$1.15BOCI-Prudential Asset Management

0.4%26.7%$0.2100.0%132.1%$1.12Hua An Fund Management

0.2%5.4%$0.125.0%214.8%$2.610Polaris

0.1%3.7%$0.10.0%005.5%$3.017Samsung Investment Trust Management

0.3%5.8%$0.20.0%016.1%$3.32E Fund Management

0.0%2.1%$0.10.0%026.8%$3.72China Asset Management

-0.4%-0.8%-$0.10.0%0018.4%$9.919iShares


% marketShare

%AUM

AUM(US$ Bn)

%ETFs

#ETFs

#planned

%total

AUM(US$ Bn)

#ETFsProvider

continued…


ETF providers in Asia Pacific (ex-Japan): ranked by AUM (continued)


$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

ADV(US$ Bn)

0.0%4.3%$0.00.0%000.1%$0.022Prudential Asset Management

2

1

1

1

1

1

1

2

2

1

1

3

2

1

1

1

1

3

2

1

4

4

2

# total listings

YTD changeFeb-11

-0.2%-36.5%-$0.10.0%000.4%$0.24Fubon Asset Management

0.0%9.6%$0.0100.0%100.1%$0.02KTB Asset Management

0.0%11.2%$0.00.0%000.1%$0.01Daishin Investment Trust Management

0.1%100.0%$0.0100.0%100.1%$0.01China Merchants Fund Management

0.0%-19.0%$0.00.0%000.1%$0.01Sensible Asset Management

-0.1%-43.7%$0.00.0%000.1%$0.01UOB Asset Management

0.0%-2.7%$0.00.0%000.1%$0.11Hanwha Investment Trust Management

0.0%-1.2%$0.00.0%000.1%$0.11CCB Principal Asset Management

0.0%18.6%$0.0100.0%130.1%$0.12Motilal Oswal Asset Management

0.0%-7.5%$0.00.0%000.1%$0.12One Asset Management

0.0%-10.7%$0.00.0%030.2%$0.11Penghua Fund Management

0.0%1.3%$0.00.0%000.2%$0.11Ping An

0.0%15.5%$0.050.0%130.2%$0.13BetaShares Capital

0.0%-22.0%$0.00.0%000.2%$0.12Yurie Asset Management

0.0%-3.8%$0.00.0%000.2%$0.11HFT Investment Management

0.0%-11.1%$0.00.0%000.2%$0.11AMP

0.1%33.7%$0.00.0%010.3%$0.11Russell Investments

0.0%0.9%$0.00.0%000.3%$0.21Fortune SGAM Fund Management

0.0%-6.5%$0.00.0%010.3%$0.22CIMB-Principal Asset Management

0.0%1.1%$0.00.0%000.4%$0.22AmInvestment Management

0.0%-3.3%$0.00.0%000.4%$0.21i-VCAP Management

0.0%-0.3%$0.00.0%000.4%$0.22Vanguard

0.2%55.5%$0.1100.0%100.5%$0.22ICBC Credit Suisse Asset Management

% marketshare

%AUM

AUM(US$ Bn)

%ETFs

#ETFs

#planned

%total

AUM(US$ Bn)

#ETFsProvider

continued…


ETF providers in Asia Pacific (ex-Japan): ranked by AUM (continued)


$0.9

-

-

-

-

-

-

-

-

-

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

ADV(US$ Bn)

-----5----Other (Planned)

0.0%0.9%$0.00.0%000.0%$0.011Quantum Asset Management

0.0%83.1%$0.00.0%000.0%$0.011PRUDENTIAL ICICI

-----2----Guotai Asset Management

-----1----Government Service Insurance Systems

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

324

-

-

-

-

-

1

1

1

1

1

1

1

1

6

1

1

3

# totallistings

YTD changeFeb-11

0.0%1.2%$0.00.0%000.0%$0.01Tong Yang Investment Trust Management

1.4%$0.78.5%1754100.0%$54.0217Total

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

-----1---Religare India Asset Management

-----1---Fullgoal Fund Management

-----1---EasyETF

-----1---Allianz SE

0.0%5.8%$0.00.0%010.0%$0.01UTI Asset Management

0.0%4.6%$0.00.0%000.0%$0.01Hyundai Investments

0.0%-91.2%$0.00.0%000.0%$0.01China International Capital Corp

0.0%-6.9%$0.00.0%040.0%$0.01Reliance Capital Asset Management

0.0%-6.9%$0.00.0%000.0%$0.01Indo Premier Securities

0.0%0.2%$0.00.0%000.0%$0.01TMB Asset Management

0.0%-3.6%$0.00.0%000.0%$0.01Krung Thai Asset Management

0.0%3.2%$0.00.0%010.0%$0.01Daiwa Asset Management

0.0%-4.1%$0.00.0%000.0%$0.06Australian Index Investments

0.1%100.0%$0.0100.0%100.1%$0.01Midas Asset Management

0.0%-3.1%$0.00.0%000.1%$0.03Kotak Mahindra Asset Management

% marketshare

%AUM

AUM(US$ Bn)

%ETFs

#ETFs

#planned

%total

AUM(US$ Bn)

#ETFsProvider


Top 20 ETFs in Asia Pacific (ex-Japan)

* This is a synthetic ETF. The relevant annotation that the fund is a synthetic ETF is a Hong Kong regulatory requirement. As such, for funds that are not authorized in Hong Kong, they may not carry the same annotation even though they may invest substantially in financial derivatives instruments.


43.4429,316855.9510180 CHChinaSHANGHAI SSE180 ETF

5.91,2481,002.32827 HKHong KongWorld Index Shares ETFs - CSI 300 *

26.656,393616.5159902 CHChinaChina SME ETF

5.6808814.2INDIA SPSingaporeiShares MSCI India ETF

5.829,902570.1159903 CHChinaSSE Component Stock Index ETF

0.22,039598.7510010 CHChinaBank Of Communications Schroder SSE180

8.814,328482.20061 TTTaiwanW.I.S.E. Polaris CSI 300 Investment Trust

1.5137522.6XCSI SPSingaporedb x-trackers CSI300 Index ETF

2.67,624396.6510880 CHChinaHuatai-PineBridge Dividend ETF

4.5822450.5102780 KSSouth KoreaSamsung KODEX Samsung Group ETF

South Korea

Taiwan

Australia

Hong Kong

Hong Kong

China

China

Hong Kong

Hong Kong

Hong Kong

Countrylisted

1,648

19,151

546

6

1,674

715,215

314,261

35

16,953

109,764

ADV(‘000

shares)

38.51,700.1069500 KSSamsung Kodex200 ETF

38.01,779.10050 TTPolaris Taiwan Top 50 Tracker

25.42,392.1STW AUSPDR S&P/ASX 200 Fund

0.7

26.4

90.5

95.5

1.0

50.5

179.6

ADV(US$ Mn)


2,392.52821 HKABF Pan Asia Bond Index Fund

2,713.22828 HKHang Seng H-Share Index ETF

2,991.0159901 CHE Fund SZSE 100

3,039.8510050 CHChina AMC SSE 50

3,838.82833 HKHang Seng Index ETF

6,613.02800 HKTracker Fund of Hong Kong (TraHK)

7,655.52823 HKiShares FTSE A50 China Index ETF*

AUM(US$ Mn)

Bloombergticker ETF

616.556,39326.6159902 CHChinaChina SME ETF

131.04,01228.3114800 KSSouth KoreaSamsung KODEX Inverse ETF

2,392.154625.4STW AUAustraliaSPDR S&P/ASX 200 Fund

2,713.21,67426.42828 HKHong KongHang Seng H-Share Index ETF

482.214,3288.80061 TTTaiwanW.I.S.E. Polaris CSI 300 Investment Trust

39.512,05014.73061 HKHong Kongdb x-trackers CSI300 Banks Index ETF

1,002.31,2485.92827 HKHong KongWorld Index Shares ETFs - CSI 300 China

321.817,1438.5510130 CHChinaE Fund SSE Mid-cap ETF

570.129,9025.8159903 CHChinaSSE Component Stock Index ETF

222.52545.9102110 KSSouth KoreaMirae Asset MAPS TIGER 200 ETF

Hong Kong

China

Taiwan

South Korea

China

Hong Kong

South Korea

China

China

Hong Kong

Countrylisted

26,654

65,329

19,151

1,648

429,316

16,953

4,184

715,215

314,261

109,764

ADV(‘000

shares)

522.628.83049 HKdb x-trackers CSI300 Index ETF

268.831.8510170 CHGTJA Allianz SSE Commodity Equity Index

1,779.138.00050 TTPolaris Taiwan Top 50 Tracker

1,700.1

855.9

6,613.0

291.3

2,991.0

3,039.8

7,655.5

AUM(US$ Mn)


38.5069500 KSSamsung Kodex200 ETF

43.4510180 CHSHANGHAI SSE180 ETF

50.52800 HKTracker Fund of Hong Kong (TraHK)

53.5122630 KSSamsung KODEX Leverage ETF

90.5159901 CHE Fund SZSE 100

95.5510050 CHChina AMC SSE 50

179.62823 HKiShares FTSE A50 China Index ETF

ADV(US$ Mn)

Bloombergticker ETF


ETFs and ETPs listed in Japan

At the end of February 2011, the Japanese ETF industry had 81 ETFs with 84 listings and assets of US$32.4 Bn, from seven providers on three exchanges. This compares to 70 ETFs with 73 listings and assets of US$24.1 Bn from six providers on two exchanges, at the end of February 2010. There are 178 ETFs which have filed notifications in Japan.Assets

• YTD, assets have increased by 0.7% from US$32.2 Bn to US$32.4 Bn, compared to the 5.6% increase in the MSCI Japan Index inUS dollar terms. This compares to a 2.3% decrease in assets over the same period in 2010.

ETFs• YTD, the number of ETFs increased by 1.3% with one new ETF launched. This compares to a 2.9% increase over the same period in

2010, when two new ETFs launched.Trading volume

• In February 2011, the ETF average daily trading volume in US dollars increased by 9.6% to US$0.2 Bn compared to December 2010. This compares to average daily trading volume of US$0.1 Bn in February 2010.

ETF providers• Nomura Asset Management is the largest ETF provider in terms of assets, with US$16.4 Bn in 32 ETFs, reflecting 50.4% market share;

Nikko Asset Management is second with 17 ETFs, assets of US$7.2 Bn, and 22.2% market share; followed by Daiwa Asset Management with 22 ETFs, assets of US$6.3 Bn and 19.3% market share, at the end of February 2011.

Mutual funds• In Japan, net sales of mutual funds (excluding ETFs) were US$65.1 Bn, while net sales of ETFs domiciled in Japan were US$3.9 Bn

during 2010 according to Strategic Insight.ETPs

• Additionally, there were nine other ETPs1 with 20 cross listings and assets of US$0.4 Bn from four providers on two exchanges.This compares to four ETPs with ten cross listings and assets of US$0.3 Bn from three providers on two exchanges, at the end of February 2010.




Japan ETF and ETP asset growth


9

81

$0.4

$32.4

Feb-11

9

80

$0.4

$32.2

2010

5

68

$0.3

$24.6

2009

4

61

$0.3

$27.4

2008

1

15

$0.0

$34.2

2007

13

$34.6

2006

13

$31.8

2005

15

$30.3

2004

18

$27.6

2003

18

$21.0

2002

8

$6.6

2001

# ETPs

# ETFs

ETP assets

ETF assets

Assets (US$ Bn)

Assets (US$ Bn)

0

5

10

15

20

25

30

35

40

0

10

20

30

40

50

60

70

80

90

# products


ETF providers in Japan: ranked by AUM


$0.2

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.0

$0.1

ADV(US$ Bn)

0.0%152.3%$0.00.0%000.1%$0.011Kokusai Asset Management

84

1

1

1

2

1

6

22

17

32

# totallistings

YTD changeFeb-11

-2.0%-8.8%-$0.60.0%0019.3%$6.322Daiwa Asset Management

0.7%$0.21.3%13100.0%$32.481Total

---------State Street Global Advisors

---------Samsung Investment Trust Management

---------EasyETF

0.0%1.4%$0.00.0%000.1%$0.02Simplex Asset Management

0.0%1.0%$0.00.0%000.1%$0.01iShares

0.7%10.8%$0.220.0%107.7%$2.56Mitsubishi UFJ Asset Management

1.9%10.0%$0.70.0%0322.2%$7.217Nikko Asset Management

-0.6%-0.4%-$0.10.0%0050.4%$16.432Nomura Asset Management

% marketshare

%AUM

AUM(US$ Bn)

%ETFs

#ETFs

#planned

%total

AUM(US$ Bn)

#ETFsProvider


Top 20 ETFs in Japan


1.56330.81309 JPSSE 50 Index Linked ETF

2.51,508382.31615 JPTOPIX Banks Exchange Traded Fund

2.721690.61346 JPMAXIS NIKKEI225 ETF

3.02,2111,215.91670 JPMAXIS S&P Mitsubishi Group ETF

2.82412,912.21305 JPDaiwa ETF TOPIX

0.6163146.91325 JPNEXT FUNDS Ibovespa Linked ETF

0.111200.31311 JPTOPIX Core 30 Exchange Traded Fund

0.0193.21310 JPDaiwa ETF TOPIX Core 30

1.178102.11343 JPNEXT FUNDS Tokyo Stock Exchange REIT Index ETF

0.116213.11344 JPMAXIS TOPIX Core30 ETF

0.868313.21348 JPMAXIS TOPIX ETF

0.01986.41319 JPNikkei 300 Stock Index Listed Fund

0.3788.51322 JPListed Index Fund China A Share (Panda) CSI 300

0.53563.51345 JPListed Index Fund J-REIT

0.32453.51681 JPListed Index Fund International Emerging Countries Equity

104

377

303

387

2,639

ADV(‘000

shares)

13.4

4.3

39.6

50.1

30.9

ADV(US$ Mn)


3,036.71320 JPDaiwa ETF NIKKEI 225

3,196.41308 JPListed Index Fund TOPIX

3,608.21330 JPListed Index Fund 225

6,881.91321 JPNIKKEI 225 ETF

7,885.91306 JPTOPIX ETF

AUM(US$ Mn)

Bloombergticker ETF

382.31,5082.51615 JPTOPIX Banks Exchange Traded Fund

2,912.22412.81305 JPDaiwa ETF TOPIX

1,215.92,2113.01670 JPMAXIS S&P Mitsubishi Group ETF

330.861.51309 JPSSE 50 Index Linked ETF

690.6212.71346 JPMAXIS NIKKEI225 ETF

102.1781.11343 JPNEXT FUNDS Tokyo Stock Exchange REIT

19.481.11552 JPKokusai S&P500 VIX Short-Term Futures Index ETF

146.91630.61325 JPNEXT FUNDS Ibovespa Linked ETF

313.2680.81348 JPMAXIS TOPIX ETF

14.9200.41551 JPSimplex JASDAQ TOP 20 Exchange Traded Fund

63.5350.51345 JPListed Index Fund J-REIT

46.630.41329 JPiShares Nikkei 225

43.13250.41678 JPNEXT FUNDS India S&P CNX Nifty Linked ETF

88.570.31322 JPListed Index Fund China A Share (Panda) CSI 300

53.5240.31681 JPListed Index Fund International Emerging Countries

377

104

2,639

303

387

ADV(‘000

shares)

3,196.4

3,036.7

7,885.9

3,608.2

6,881.9

AUM(US$ Mn)


4.31308 JPListed Index Fund TOPIX

13.41320 JPDaiwa ETF NIKKEI 225

30.91306 JPTOPIX ETF

39.61330 JPListed Index Fund 225

50.11321 JPNIKKEI 225 ETF

ADV(US$ Mn)

Bloombergticker ETF


ETFs and ETPs listed in Latin America

At the end of February 2011, the Latin American ETF industry had 26 ETFs, with 365 listings and assets of US$10.2 Bn, from four providers on three exchanges. This compares to 20 ETFs, with 223 listings and assets of US$9.3 Bn from three providers on three exchanges, at the end of February 2010.

There were 289 ETFs cross listed in Mexico, 313 ETFs registered for sale in Chile and 299 ETFs registered for sale in Peru, at the end of February 2011.

Assets

• YTD, assets have increased by 0.7% from US$10.1 Bn to US$10.2 Bn, compared to the 2.8% decrease in the MSCI EM Latin America Index in US dollar terms. This compares to a 5.1% decrease in assets over the same period in 2010.

ETFs

• YTD, the number of listings have increased by 2.8%, with ten new ETFs cross listed in Latin America. This compares to a 19.9% increase over the same period in 2010, with 3 new primary listings and 34 new cross listings.

Trading volume

• In February 2011, the ETF average daily trading volume in US dollars increased by 179.4% to US$0.4 Bn, compared to December 2010. This compares to average daily trading volume of US$0.4 Bn in February 2010.

ETF providers

• iShares is the largest ETF provider in terms of assets with US$7.6 Bn, in 18 ETFs, reflecting 74.6% market share; BBVA Asset Management is second with US$1.4 Bn in five ETFs and 13.3% market share, at the end of February 2011.

ETPs

• Additionally, there were 25 other ETPs1 cross listed on two exchanges in Latin America at the end of February 2011. This compares to seven other ETPs cross listed on one exchange, at the end of February 2010.




Latin America ETF asset growth


26

10.2

Feb-11

26

$10.1

2010

17

$9.8

2009

10

$5.5

2008

6

$6.3

2007

2

$2.7

2006

2

$1.3

2005

2

$0.4

2004

1

$0.4

2003

1

$0.1

2002

# ETFs

ETF assets

Assets (US$ Bn)

0

2

4

6

8

10

12

Assets (US$ Bn)

0

5

10

15

20

25

30

# products


ETF providers in Latin America: ranked by AUM

$394.6$0.5$2.3$1.6$28.2$5.1$33.1$0.0$0.0$0.1$16.4$0.1$1.3$18.2$287.5

ADV(US$ Mn)

--------16-Van Eck Associates Corp

--------9-WisdomTree Investments

0.0%10.4%$0.00.0%000.1%$0.022Protego--------4-Direxion Shares--------10-EasyETF

365

39

2818142

110221

# totallistings

YTD changeFeb-11

-0.8%-5.7%-$0.10.0%0112.0%$1.21Itau Unibanco

0.7%$0.10.0%02100.0%$10.226Total

---------Vanguard

---------State Street Global Advisors---------ProShares---------PowerShares---------Lyxor Asset Management---------Global X Funds

-3.8%100.0%-$0.4100.0%0013.3%$1.45BBVA Asset Management4.6%7.3%$0.50.0%0174.6%$7.618iShares

% marketshare

%AUM

AUM(US$ Bn)

%ETFs

#ETFs

#planned

%total

AUM(US$ Bn)

#ETFsProvider

MexicoMexicoMexicoMexicoMexicoBrazil

MexicoMexicoBrazil

Mexico

Countrylisted

21183075

138569913

5,83624

52,910

ADV(‘000

shares)

0.252.5CETETRC MMiShares LATixx Mexico CETETRAC0.070.7IMCTRAC MMiShares IPC Mid Cap Total Return0.3150.5UDITRAC MMiShares LATixx Mexico UDITRAC0.10.922.62.517.01.3

161.3

ADV(US$ Mn)


160.1CORPTRC MMiShares Mexico Corporate Bond344.0MEXTRAC MMMEXTRAC489.3BOVA11 BZiShares Ibovespa Fundo de Índice509.6ILCTRAC MMiShares IPC Large Cap Total Return 998.8BRTRAC MMBRTRAC 10

1,220.8PIBB11 BZPIBB FUNDO INDICE BRASIL 506,047.5NAFTRAC MMiShares NAFTRAC

AUM(US$ Mn)

Bloombergticker ETF

MexicoMexicoMexicoMexicoMexicoMexicoBrazil

MexicoMexicoMexico

Countrylisted

6576

337381

5,8361,587569373574

52,910

ADV(‘000

shares)

6.07.9DIA* MMSPDR Dow Jones Industrial Average ETF94,779.010.0SPY* MMSPDR S&P 5005,723.611.2EWC* MMiShares MSCI Canada Index Fund1,656.9998.8

6,157.3489.3

12,690.625,435.26,047.5

AUM(US$ Mn)

Ranked by US$ Average Daily Trading Volumes (ADV)1

12.2FAS* MMDirexion Daily Financial Bull 3x Shares17.0BRTRAC MMBRTRAC 1017.9EWJ* MMiShares MSCI Japan Index Fund22.6BOVA11 BZiShares Ibovespa Fundo de Índice27.5EWZ* MMiShares MSCI Brazil Index Fund33.1QQQQ* MMPowerShares QQQ Trust161.3NAFTRAC MMiShares NAFTRAC

ADV(US$ Mn)

Bloombergticker ETF

Top 10 ETFs in Latin America

1. For ETFs cross listed into Latin America from the US, AUM reflects total fund AUM (which is not counted in previous totals). ADV reflects US dollar volume of the specific exchange listing shown.



ETFs and ETPs listed in Canada

At the end of February 2011, the Canadian ETF industry had 169 ETFs and assets of US$40.3 Bn, from four providers on one exchange.This compares to 132 ETFs and assets of US$29.7 Bn from four providers on one exchange, at the end of February 2010.

9 March 2011 will mark the 21st anniversary of the first ETF globally, which listed in Canada in 1990.

Assets

• YTD, assets have increased by 5.1%, from US$38.4 Bn to US$40.3 Bn, which is less than the 7.7% increase in the MSCI Canada Indexin US dollar terms. This compares to a 4.3% increase in assets over the same period in 2010.

• In February 2011, net inflows into Canadian domiciled ETFs totalled US$0.3 Bn. ETFs with exposure to North American indices saw US$0.2 Bn net inflows, of which exposure to local Canadian equity indices saw US$0.1 Bn net inflows, while ETFs/ETPs with fixed income exposure saw US$0.1 Bn net inflows.

ETFs

• YTD, the number of ETFs have increased by 7.6% with 12 new ETFs launched. This compares to a 21.1% increase over the same periodin 2010, when 23 new ETFs launched.

Trading volume

• In February 2011, the ETF average daily trading volume in US dollars increased by 10.6% to US$1.1 Bn, compared to December 2010.This compares to average daily trading volume of US$0.9 Bn in February 2010.



ETFs and ETPs listed in Canada (continued)

ETF providers

• iShares is the largest ETF provider in terms of assets with US$29.6 Bn in 38 ETFs, reflecting 73.3% market share; Claymore Investments is second with 29 ETFs and US$5.9 Bn, a 14.7% market share; followed by BetaPro Management with 62 ETFs, assets of US$3.0 Bn and 7.3% market share, at the end of February 2011.

• Of the US$0.3 Bn net inflows into Canadian listed ETFs in February 2011, BMO Asset Management saw net inflows of US$0.2 Bn and Claymore Investments saw net inflows of US$0.1 Bn.

ETPs

• Additionally, there were 24 other ETPs1 cross listed on one exchange in Canada at the end of February 2011. This compares to eight other ETPs cross listed on one exchange, at the end of February 2010.




Canada ETF asset growth


169

$40.3

Feb-11

3

$4.0

2000

1

$0.4

1999

157

$38.4

2010

110

$28.5

2009

77

$15.7

2008

46

$18.0

2007

26

$13.0

2006

20

$10.6

2005

16

$7.4

2004

16

$5.5

2003

15

$3.4

2002

14

$3.1

2001

# ETFs

ETF assets

Assets (US$ Bn)

0

5

10

15

20

25

30

35

40

45

Assets (US$ Bn)

0

20

40

60

80

100

120

140

160

180

# products


ETF providers in Canada: ranked by AUM


4.12091,118.1XIN CNiShares MSCI EAFE Index Fund (CAD-Hedged)

34.11,4781,128.5XEG CNiShares S&P/TSX Capped Energy Index Fund

4.42981,206.4XRE CNiShares S&P/TSX Capped REIT Index Fund

25.41,0071,288.6XGD CNiShares S&P/TSX Global Gold Index Fund

6.63171,306.7XCB CNiShares DEX All Corporate Bond Index Fund

263

306

637

317

17,449

ADV(‘000

shares)

6.0

9.3

9.9

9.4

364.2

ADV(US$ Mn)


1,367.4XIC CNiShares S&P/TSX Capped Composite Index

1,487.8XBB CNiShares DEX Universe Bond Index Fund

1,593.0XSP CNiShares S&P 500 Index Fund (CAD-Hedged)

2,007.3XSB CNiShares DEX Short Term Bond Index Fund

11,864.2XIU CNiShares S&P/TSX 60 Index Fund

AUM(US$ Mn)

Bloombergticker ETF

1,288.61,00725.4XGD CNiShares S&P/TSX Global Gold Index Fund

1,128.51,47834.1XEG CNiShares S&P/TSX Capped Energy Index Fund

182.43,05648.0HGU CNHorizons BetaPro S&P/TSX Global Gold Bull Plus

57.61,77018.1HGD CNHorizons BetaPro S&P/TSX Global Gold Bear Plus

66.11,28732.1HXU CNHorizons BetaPro S&P/TSX 60 Bull Plus Fund

8,917

9,974

22,988

15,460

17,449

ADV(‘000

shares)

113.4

86.9

613.7

334.9

11,864.2

AUM(US$ Mn)


61.9HOD CNHorizons BetaPro NYMEX Crude Oil Bear Plus

99.7HND CNHorizons BetaPro NYMEX Natural Gas Bear Plus

124.5HNU CNHorizons BetaPro NYMEX Natural Gas Bull Plus

127.6HOU CNHorizons BetaPro NYMEX Crude Oil Bull Plus

364.2XIU CNiShares S&P/TSX 60 Index Fund

ADV(US$ Mn)

Bloombergticker ETF

Top 10 ETFs in Canada

$1.1

$0.0

$0.6

$0.0

$0.5

ADV(US$ Bn)

$0.3

$0.2

$0.0

$0.1

$0.0

Feb-11NNA

(US$ Bn)

$0.0

$0.3

-$0.1

$0.3

-$0.4

2011 YTD NNA

(US$ Bn)

YTD changeFeb-11

-0.6%-2.6%-$0.13.3%237.3%$3.062BetaPro Management

5.1%$1.97.6%129100.0%$40.3169Total

0.7%24.5%$0.433.3%1004.7%$1.940BMO Asset Management

0.4%7.7%$0.40.0%0614.7%$5.929Claymore Investments

-0.5%4.3%$1.20.0%0073.3%$29.638iShares

% marketshare

%assets

AUM(US$ Bn)

%ETFs

#ETFs

#planned

%total

AUM(US$ Bn)

#ETFsProvider


Middle East and Africa ETF and ETP asset growth

Note: Data as at end February 2011. Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg, Bank of Israel.

327

29

$18.0

$2.3Feb-11

1

$0.0

2000

327

29

$17.3

$2.32010

297

23

$14.8

$1.82009

246

17

$8.1

$1.22008

211

11

$9.1

$2.22007

94

8

$4.5

$1.22006

41

7

$0.4

$1.62005

18

5

$0.5

$1.22004

3

4

$0.2

$0.82003

1

3

$0.1

$0.62002

1

1

$0.1

$0.32001

# ETPs

# ETFs

ETP assets

ETF assetsAssets (US$ Bn)

0

2

4

6

8

10

12

14

16

18

20

Assets (US$ Bn)

0

50

100

150

200

250

300

350

# products


ETF providers in Middle East and Africa: ranked by AUM


$13.7----

$0.0$0.0$0.1$0.6$0.0$3.6$0.1$1.5$0.3$7.5

ADV(US$ Mn)

2.6%141.8%$0.10.0%004.4%$0.12STANLIB-1.7%-22.9%$0.00.0%006.5%$0.17Absa Capital

-0.2%-11.7%$0.00.0%001.9%$0.01Fortress Asset Managers

-0.1%-4.3%$0.00.0%007.2%$0.22Bips Investment Managers1.8%19.0%$0.00.0%0010.1%$0.25db x-trackers-2.5%-5.8%-$0.10.0%0167.2%$1.57Satrix Managers

0.0%-9.1%$0.00.0%020.2%$0.01National Bank of Abu Dhabi0.0%-6.5%$0.00.0%010.2%$0.01Nedbank Capital0.1%15.2%$0.00.0%000.9%$0.02Falcom Financial Services-0.1%-6.3%$0.00.0%001.4%$0.01Investec Fund Management

-----13---Other (Planned)

YTD changeFeb-11

-----1---HSBC/Hang Seng

-2.4%-$0.10.0%021100.0%$2.329Total

-----2---Gaon Investment House-----1---Al Mal Capital

% marketshare

%AUM

AUM(US$ Bn)

%ETFs

#ETFs

#planned

%total

AUM(US$ Bn)

#ETFsProvider

Top 10 ETFs in Middle East and Africa

South AfricaSouth AfricaSouth AfricaSouth AfricaSouth AfricaSouth AfricaSouth AfricaSouth AfricaSouth AfricaSouth Africa

Countrylisted

14556

256159494

716120

2,2431,076

ADV(‘000

shares)

0.175.7STXSWX SJSATRIX SWIX TOP 400.177.2DBXWD SJdb x-trackers MSCI World0.384.7STXRAF SJSATRIX RAFI 40 Total Return0.60.10.03.00.10.54.4

ADV(US$ Mn)


88.1STXIND SJSATRIX Industrials90.3BIPINF SJBips Government Inflation Linked Bond Fund90.7NRD SJNewRand ETF95.2STAN40 SJSTANLIB Top 40 Fund113.5STXFIN SJSATRIX Financials145.7STXDIV SJSatrix Dividend Plus950.0STX40 SJSATRIX40

AUM(US$ Mn)

Bloombergticker ETF

South AfricaSouth AfricaSouth AfricaSouth AfricaSouth AfricaSouth AfricaSouth AfricaSouth AfricaSouth AfricaSouth Africa

Countrylisted

120256

2,243638159404330174716

1,076

ADV(‘000

shares)

113.50.1STXFIN SJSATRIX Financials84.70.3STXRAF SJSATRIX RAFI 40 Total Return

145.70.5STXDIV SJSatrix Dividend Plus5.288.132.471.761.995.2

950.0

AUM(US$ Mn)


0.6STANSX SJSTANLIB SWIX 40 Fund0.6STXIND SJSATRIX Industrials0.6ZGOVI SJZshares GOVI1.4BIPS40 SJBips Top 401.5STXRES SJSATRIX RESI3.0STAN40 SJSTANLIB Top 40 Fund4.4STX40 SJSATRIX40

ADV(US$ Mn)

Bloombergticker ETF


Exchange Traded Funds (ETFs): product overview

• Most ETFs in Europe are UCITS funds which are the same as traditional mutual funds in Europe.

• In the United States, most ETFs are registered investment companies regulated under the Investment Company Act of 1940 (the “1940 Act”), the same as traditional mutual funds.

• ETFs in the United States require special exemptions from the Securities and Exchange Commission since they buy and sell shares at Net Asset Value (“NAV”) at the end of each day to a limited group of institutional investors.

• As a result, other shareholders in the United States who wish to buy or sell shares must trade in the secondary market, rather than directly with the fund unlike mutual funds.

• ETFs are open-ended index tracking funds1.

• ETFs are managed by asset managers.

• ETFs are bought and sold through brokers.

• Trade on the exchange like any other stock.

• Settle like any other share on the exchange.

• Can be purchased, cleared and held in brokerage orcustodial account.

• Can go long or short.

• Are lendable and marginable.

• Transparent underlying portfolios generally available daily.

• Real time indicative NAV.

• ETFs will generally price around their NAV due to the creation/ redemption process.

• Benefits:

– ETFs are not a derivative.

– Flexible.

– Transparent.

– Liquid.

– Small minimum investment.

– Ability to trade with multiple counterparties.

• ETFs are generally liquid:

– Liquidity reflects liquidity of underlying basket of shares not the trading volume of the ETF – as long as trading with a broker which is an authorised participant.

– Creation/redemption process makes ETFs as liquid as their underlying shares.

– Unique structure for brokers who enter into legal agreements with the ETF asset managers to be authorised participants, creation/redemption agents or liquidity providers:

• Portfolio of securities can be exchanged for ‘Creation Units’.

• ‘Creation Units’ can be redeemed for underlying portfolio.

• Creation/redemption (‘in kind’) feature allows for arbitrage and results in the fund trading near NAV.

1. Note a few active funds which disclose their portfolios daily have been approved and listed.


Exchange Traded Products (ETPs): product overview

• ETPs are products that have similarities to ETFs in the way theytrade and settle but they do not use a mutual fund structure.

• The use of other structures by ETPs can create different tax andregulatory implications for investors when compared to ETFs which are funds.

• Structures often used by ETPs:

– Grantor Trusts.

– Delaware Statutory Trust.

– New York Grantor Trust.

– Special Purpose Company.

– Partnerships.

– Secured Note.

– Unsecured Note.

– Commodity Pool.

• ETPs may not provide transparency on the underlying portfolio.

• ETPs may not have a real time indicative NAV.

• ETPs may expose the investor with up to 100% counterparty risk.

• ETPs typically do not have an ‘in-kind’ creation/redemption process.

• ETPs are open-ended.

• ETPs are bought and sold through brokers.

• Trade on the exchange like any other stock.

• Settle like any other share on the exchange.

• Can be purchased, cleared and held in brokerage orcustodial account.

• Can go long or short.

• Are lendable and marginable.


ETF/ETP tool box

• EONIA, SONIA

• Fed funds

Cash

• Hedge funds

• Carbon

• Volatility

Alternatives

• Government

• Corporate

• Credit

• Inflation

• High yield

• Mortgage backed

• Emerging markets

Fixed income

• Developed currencies

• Emerging market currencies

• Inverse/leveraged

• Strategy

– e.g. carry, momentum…

Currency

2,557 ETFs with 5,802 ETF listings 1,092 other ETPs1 with 1,781 ETP listingsTotal: 3,649 products with 7,583 listings

1. Other Exchange Traded Products (ETPs) include Holding Company Depository Receipts (HOLDRs), Exchange Traded Commodities (ETCs), Exchange Traded Currency products, and Exchange Traded Notes (ETNs). Data as at end February 2011.

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

• Global

• Capitalisation

– e.g. large, mid, small…

• Sectors

• Broad markets

• Emerging markets

• Countries


• Styles

– Active

– Dividend

– Fundamental

– Infrastructure

– Real estate

– Shariah

– Thematic

– Private equity

– Value

– Growth

Equity

• Broad

– e.g. S&P, GSCI, DJUBS, RICI, CRB…

• Sub-indices

– e.g. energy, livestock, precious metals, industrial metals, agriculture…

• Individual commodities

• Based on physically held assets

– e.g. gold, silver,platinum, palladium…

• Based on futures

• Based on forwards


Commodities


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.

New asset classes

CAGR, 2008-2012 (%)

Active Passive InnovativeEstimated size, 2008 ($trillions). Scale = $1 trillion

Moneymarket

Fixed incomecore and

specialitiesEquity

core andspecialities

Net revenue margin (basis points)

ETFs

Passive fixedincome

Passiveequity

Real estate(including REITs)

Commodities

Quantitative products

Absolute return

Infrastructure funds

Short-extension funds

Hedge funds

Private equity

Liability-driveninvestments

Structuredproducts

Active products

Innovative productsPassive products/ETFs


• What is my benchmark?

• What are my regulatory guidelines?

• What are my mandate constraints?

• What are my counterpartyrisk guidelines?

• What are my tracking risk guidelines?

• How can I gain long and/orshort 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?

Considerations

• Product structure

• Domicile

• Country registrations

• Portfolio holdings

• Assets Under Management

• Average dailytrading volume

• ETF provider / manager

• Transparency

• Client service

• Product choice

• Liquidity

How should I decide which product to use?

Products

• Portfolio trading

• ETFs

• ETNs

• ETPs

• Swaps

• Futures

• Options

• Securitised products:certificates, warrants,equity linked notes, local access products


Why use ETFs?

• ETF units and underlying assets can be lent out to potentially offset holding costsSecurities lending

• ETFs offer a cost-effective route to diversified market exposure

• 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 (per annum) for the average active equity fund1

Cost effectiveness

• ETFs are listed on exchanges and can be traded at any time the market is open

• Pricing is continuous throughout the day Flexibility

• ETFs provide immediate exposure to a basket or group of securities for instant diversification

• Broad range of asset classes including equities, bonds, commodities, investment themes etcDiversification

• 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 processLiquidity

• Investors can generally see the ETF composition at any given timeTransparency

1. Source: Morningstar. March 2010.


How can ETFs be used?

• Interim beta: Maintain exposure to a given market while searching for a 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)

Tactical

• Market exposure:Implement a wide variety of investment strategies using a broad range of market exposures

• Directional views: Establish a broad directional market position, use long and 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

Strategic


ETFs can offer solutions for a range of portfolio strategies

• Exposures to markets or asset classes where one has no expertise or operational capabilitiesExposure

• Manage inflows, outflows, transitions

• Obtain wider exposures than offered by other Delta 1 productsCash equitisation

• Active risk budgeting

• Combine ETFs in managing total portfolio volatility or duration adjustments in fixed income portfoliosRisk management

• Establish core holdings

• Establish single country or sector satellitesStrategic asset allocations

• Implement short-, long- term and/or neutral market views: – Hard to access asset classes, themes, sector, country– Tactical asset allocation

Portfolio management

• Fill allocations required by investment strategy• Improve diversification• Gain exposure to size, style, yield, sector, geography

Portfolio construction

Note: 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.


Asian institutions build out investment capabilities

• Asian institutions’ appetite for using external asset managers is growing slowly with the recovery in global markets.

• Although a recent flurry of RFPs marked a resumption in manager hiring after a near dead-stop during the market crisis, institutional investors in Asia continue to build out their own investment management capabilities with an eye towards internalising assets for specific investment strategies.

• In addition, Asian institutions are not planning to limit their internal management to passive strategies; many are looking to go toe to toe with external managers in active strategies with the goal of generating alpha.

• These conclusions are drawn from the results of Greenwich Associates’ 2010 Asian Investment Management Study1, in which 84 of the largest institutional investors in Hong Kong, Macau, China, Taiwan, South Korea, Singapore and other Asian countries were interviewed.

• These institutions together manage some $5 trillion in assets, a sum that was roughly unchanged from 2009 to 2010.

• About one third of Asian institutions use ETFs as part of their investment strategies.

• ETFs are most widely employed due to their relatively high levels of liquidity and flexibility, and for their ability to provide institutions with a means of accessing specific investment strategies or exposures.

1. Greenwich Associates conducted interviews with 84 of the largest institutions in Brunei, China, Hong Kong/Macau, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand. Interview topics included asset allocation, product fees paid and compensation.

Source: Greenwich Associates: Asian Institutions Build Out Internal Investment Capabilities, Asian Investment Management June 2010.


ETFs gain foothold in institutional market

1. Greenwich Associates surveyed United States 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.

2. Based on responses from 70 United States plan sponsors and money managers using ETFs. Source 2010 Greenwich Market Pulse – ETFs.Source: Greenwich Associates: ETFs Gain Foothold in Institutional Market, April 2010. 2010 Greenwich Market Pulse – ETFs.

• 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 United States pension funds, endowments and foundations has grown to about 14%, according to the results of Greenwich Associates’ most recent annual study of the United States 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.

• Greenwich Associates asked the institutions participating in the survey to name the providers they use for ETFs. The results revealed the following:

– iShares/BlackRock is by far the most widely used provider of ETFs among United States institutions; and

– 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.

How ETFs are used by United States Institutions2

56%

31%

63%

19%

31%

25%

25%

6%

45%

38%

31%

28%

24%

24%

3%

3%

0% 15% 30% 45% 60% 75% 90% 105%

Plan sponsors Money managers

Tactical adjustments

Transitions

Cash equitisation

Core/satellite

Rebalancing

Portfolio completion

ETF overlay

Other


ETFs gain foothold in institutional market (continued)

1. Based on responses from 70 United States plan sponsors and money managers using ETFs.Source: Greenwich Associates: ETFs Gain Foothold in Institutional Market, April 2010. 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.

• Almost 55% of institutions currently employing ETFs expect theirusage of the product to increase in the next three years, including nearly 20% that expect the amount of assets dedicated to ETFs togrow by 5–10% in that period.

• Money managers are slightly more apt to predict an increasein use: approximately 65% expect to be devoting more assetsto ETFs in the next 12 months, compared with half of plan sponsors.

• About 20% of plan sponsors expect to reduce their use of 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.

Expected change in asset allocation to ETFs1

10%

18%

25%

33%

(8%)

(5%)

(3%)

(20%) (10%) 0% 10% 20% 30% 40%

Increase >10%

Increase 5%–10%

Increase 1%–4%

No change

Decrease -1%–4%

Decrease -5%–10%

Decrease >-10%


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

2,926

15

68

79

101

618

2,045

2008

2,616

15

57

60

95

608

1,781

2007

2,214

30

36

51

77

461

1,559

2006

1,924

10

40

38

73

430

1,333

2005

1,627

10

19

35

58

351

1,154

2004

1,427

10

7

23

62

315

1,010

2003

1,297

11

8

19

68

302

889

2002

1,103

5

5

23

55

233

782

2001

762431278165Total

2100Other

4000Latin America

11411Asia Pacific

322473Canada

152602916Europe

561342241145United States

2000199919981997Number of institutions

Growth in institutional users of ETFs

0

500

1,000

1,500

2,000

2,500

3,000

0

500

1,000

1,500

2,000

2,500

3,000

Number of institutionsNumber of institutions



Global institutions reported assets: as at end December 2008

1.7%6.7%274,167 2,499 16,474,589 37,441 Total1.6%2.2%4,710 686 303,393 31,542 <100 Mn3.4%25.0%11,739 535 345,296 2,141 100-250 Mn3.2%27.0%13,359 323 421,369 1,196 250-500 Mn2.3%28.5%14,123 246 610,428 864 500-1000 Mn1.6%35.2%41,249 428 2,638,240 1,216 1-5 Bn1.0%47.8%15,356 98 1,481,979 205 5-10 Bn2.0%56.8%35,571 71 1,763,371 125 10-20 Bn2.0%74.3%69,810 84 3,505,831 113 20-50 Bn1.3%71.8%68,250 28 5,404,681 39 >50 Bn

Reported ETF assets (US$ Mn)

#institutions


#institutions

Reported assets(US$ Mn)

#institutionsFirm reported assets

% of ETF usersReported ETF usersAll reporting firms

0.2%0.0%7,207 6 3,423,204 29,639 Corporation0.0%0.0%––640,813 97 Government agency1.3%1.0%3,210 5 254,762 501 Holding company0.2%0.0%10,418 11 4,318,779 30,237 Strategic entities

25.7%31.5%86,869 45 338,226 143 Brokerage firms0.0%0.0%––15,206 305 Venture capital0.1%6.7%28 1 45,210 15 Sovereign wealth fund0.0%2.1%21 7 41,858 331 Private equity1.6%16.8%8,692 38 553,665 226 Pension fund

1.7%6.7%274,167 2,499 16,474,589 37,441 Total

1.3%41.6%134,501 1,857 10,209,252 4,462 Investment advisor1.0%11.8%1,670 16 160,902 136 Insurance company4.1%34.6%14,194 356 349,620 1,030 Hedge fund0.0%4.5%4 2 11,043 44 Foundation0.0%0.0%––6 2 Finance company

15.8%47.1%1,811 8 11,477 17 Endowment fund3.8%32.0%15,959 158 419,345 493 Bank and trust1.5%34.6%176,880 2,443 11,817,584 7,061 Investment managers


#institutions


#institutions

Reported assets(US$ Mn)

#institutionsFirm type

% of ETF usersReported ETF usersAll reporting firms



Types of institutional users of ETFs

2,9262,6162,2141,9241,6271,4271,2971,103762431278165Total

010111321000Venture capital

100000000000Sovereign wealth fund

233212010000Foundation

4516411110000Corporation

534332100000Holding company

974100000000Private equity

998755333111Endowment fund

172380746665605039271913Insurance company

484540373128251615151114Brokerage firm

484536453328282215985Pension fund

1931891741611391201099267301914Bank and trust

4383402852091801521441147330209Hedge fund

2,1521,9461,5641,3801,1671,023923802549319200109Investment advisor

200820072006200520042003200220012000199919981997Type of institution



Growth in institutional users of ETFs

19101212145000000Taiwan

18181815126654000Chile

161410320100000Liechtenstein

161310795564200Singapore

1416161375332000Portugal

121613131211996411Belgium

1179995520000Greece

911101384100000Netherlands

878210000000Australia

1919121271010114100Hong Kong

212071860000000Argentina

21221287111193000Austria

22201917161715127200Sweden

241911700000000Mexico

304123242526262014764Italy

333219201614131010410Luxembourg

5956424736303229241020France

70604335292119146111Germany

767676706162604732821Spain

949262624831352619730Switzerland

10195777358626855322473Canada

1201128779556155372515129United Kingdom

2,0451,7811,5591,3331,1541,010889782561342241145United States

200820072006200520042003200220012000199919981997Country

798543463111Japan

001110001100Barbados

011000000000Slovenia

000000000000Colombia

100000000000Thailand

554123211000Denmark

553587662210Ireland

546333321000Bermuda

400000000000Brazil

322211110000Iceland

200000000000India

232330110000Czech Republic

220000010000Poland

212100100000Virgin Islands (US)

121110000000Cayman Islands

111000000000Hungary

110000000000Bahamas

100011200000Peru

774333320000Norway

721000000000Malaysia

6720457730000South Africa

673333431000Finland

2,9262,6162,2141,9241,6271,4271,2971,103762431278165Total

200820072006200520042003200220012000199919981997Country


ETF portfolios

Note: 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.

Conservative Balanced Growth Dynamic

Lower

Lower

Higher

Higher

Expected risk

Expected return

Fixed incomeBarCap € Government Bond 1–3BarCap € Government Bond 3–5BarCap € Government Bond 7–10iBoxx € Liquid Corporate Bond

EquitiesMSCI Europe ex-UKFTSE 100S&P 500MSCI North AmericaNikkei 225MSCI Emerging Markets

PropertyFTSE EPRA/NAREIT Global Property Yield

AlternativesFTSE/Macquarie Global Infrastructure 100S&P Listed Private EquityDow-Jones-UBS Commodity


Core-satellite: ETFs can be used in the core portfolio, as well as in the satellite

Activestrategy

1

Activestrategy

2

Activestrategy

3

ETFsETF

satellite

ETFsatellite

ETFsatellite

Portfolio

ETFs in the satelliteETFs in the core

• Concentrated, focused ETFs.

• Sector and style.

• Individual countries and regions.

• Alternative asset class.

• A broad market index.

• Exposure to diversified baskets of securities.

• Optimised core: sector, style or country indices.


Note: 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 December 2010 to 28 February 2011. Index weights captured from Bloomberg on 04 March 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

MSCI World and MSCI EM Index: weights and performance

5.5%49.1%591United States6.2%9.7%106United Kingdom3.4%3.5%37Switzerland3.7%1.4%33Sweden

15.0%1.6%28Spain-4.5%0.7%31Singapore8.7%0.1%9Portugal7.0%0.4%10Norway

5.6%

-0.1%8.5%5.6%

15.4%-5.4%9.5%-1.7%16.5%8.7%

10.9%-1.2%8.2%7.7%4.8%5.8%1.7%

% YTD return

100.0%

0.0%1.2%9.9%1.3%0.3%0.1%1.2%0.1%3.8%4.5%0.5%0.5%5.6%0.4%0.1%3.8%

% weight

1,659Total

5New Zealand21Netherlands

340Japan30Italy14Israel5Ireland

40Hong Kong8Greece

53Germany75France

MSCI World

17Finland12Denmark

100Canada14Belgium8Austria

72Australia# stocksCountry

-11.8%1.3%19Turkey-3.8%1.7%22Thailand-6.0%11.4%125Taiwan-4.7%13.7%102South Korea-7.4%7.5%47South Africa

-3.8%

10.6%2.3%

-11.8%-11.0%7.9%-2.1%-1.3%-4.7%

-14.7%16.2%-21.5%9.0%-4.5%-2.3%

-11.8%-1.5%

% YTD return

100.0%

7.4%1.7%0.5%0.6%0.2%4.5%2.9%2.3%7.3%0.4%0.4%0.4%0.8%

17.5%1.5%

16.3%% weight

811Total

29Russia23Poland15Philippines3Peru3Morocco

24Mexico40Malaysia24Indonesia67India4Hungary

MSCI Emerging Markets

11Egypt3Czech Republic9Colombia

141China17Chile83Brazil

# stocksCountry


Fixed income ETF and ETP asset growth


432

$212.7

Feb-11

409

$207.4

2010

295

$167.1

2009

173

$103.9

2008

12251312217622# ETFs/ETPs

$60.0$35.9$21.7$11.1$5.9$4.0$0.1$0.1ETF/ETP assets

20072006200520042003200220012000Assets (US$ Bn)

0

50

100

150

200

250Assets US$ Bn

0

50

100

150

200

250

300

350

400

450# products


Fixed Income Index Guide

• Understanding index methodology is the key to selecting and using ETFs.

• Investors must understand the differences in pricing sources1, frequency of pricing updates and what prices are being captured:

– Where (one bank or consortium..)

– When (intraday, daily, weekly..)

– What (bid, mid, dirty…)

1. A fund may price a security using a different pricing source than used by the Index Provider itself.Source: Fixed Income Index Guide, BlackRock, Markit.

Government

BarclaysCapital

Government

Citigroup

Government

eb.rexx

Government

EuroMTS

Gilt

FTSE

Emerging market

JPMorgan

Government

Markit

Aggregate Corporate Inflation-linked Corporate

Corporate Asset backed Asset backed

Inflation-linked Inflation-linked

Emerging market

Credit


Comparison of fixed income index trading characteristics

Bid pricesIntraday for EUR and GBP indices, all others are end of day

Markit iBoxx consortium of up to 10 dealers Markit Indices$ Corporate


Markit iBoxx consortium of up to 10 dealers Markit IndicesGovernment – liquid capped and corporate


Markit iBoxx consortium of up to 10 dealers Markit IndicesCoveredMarkit

Bid pricesDailyJP Morgan tradersJP MorganJP Morgan

Mid pricesDailyGilt-Edged Market Makers Association (GEMMA) via ReutersFTSEFTSE

Bid pricesIntraday 9:00 am- 5:30 pm CET

MTS MarketsEuroMTSEuroMTS

Traded price dataIntraday 9:00 am- 5:00 pm CET

Eurex BondsDeutsche Börseeb.rexx

Bid prices(Japan mid prices)

DailyIndividual Citigroup trader pricingCitigroupCitigroup

Mid pricesDailyEuro government, United States TIPS, United Kingdom 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

Barclays CapitalInflation-linked world

Mid pricesDailyBarclays Capital tradersBarclays CapitalInflation-linked

Bid pricesDailyAbout 80% comes from Barclays Capital tradersBarclays CapitalCorporate

Mid pricesDailyAbout 80% comes from Barclays Capital traders The rest comes from third party vendors

Barclays CapitalGovernment – short treasury

Mid pricesDailyBarclays Capital tradersBarclays CapitalGovernment – term

Bid prices (non-government bonds)Mid prices (government bonds)

DailyAbout 80% comes from Barclays Capital tradersBarclays CapitalAggregateBarclays Capital

Price typePrice contributionPrice sourceIndexcalculationExposure

Indexfamily

Source: Fixed Income Index Guide, BlackRock, Markit.


Global commodity ETF and ETP asset growth


70218710524

141108

2135

$190.6$131.6

$5.0$0.3

$13.9$24.5$0.0

$15.3Feb-11

# ETFs/ETPs

6824343641475685211Total ETFs/ETPs1849871341365211Precious metals 1026454126-----Industrial metals24202073-----Livestock

136927937101----Energy 101625230141----Broad

223-------Alternative 13396852710-----Agriculture

$184.8$120.0$54.9$41.3$20.1$7.0$2.6$0.3$0.1$0.0ETF/ETP total$134.9$80.8$41.3$28.8$15.5$6.5$2.6$0.3$0.1$0.0Precious metals

$4.2$0.2

$13.1$20.9$0.0

$11.62010

$1.9$0.2

$14.2$15.2$0.0$7.72009

$0.3$0.2$5.0$5.2$0.0$2.92008

$0.4$0.0$1.5$7.6

-$2.92007

$0.0$0.0$1.0$3.5

-$0.02006

--

$0.1$0.4

--

2005

------

2004

------

2003

------

2002

------

2001

Industrial metalsLivestock Energy Broad Alternative Agriculture

Assets (US$ Bn)

0

20

40

60

80

100

120

140

160

180

200

Assets US$ Bn

0

200

400

600

800

# products


Commodity indices

Indices are a convenient way to access a group of commodities. Indices can represent the asset class as a whole or a particularsub-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 weightingsfor different sectors or individual commodities? Investors should be aware of these rules before investing in structured products linkedto indices.

• This section describes the components and methodologies of some of the main commodity indices. Some of the key features areoutlined below:

Note: 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 February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

Commodity index comparison

Annual

Irregular

Annual

Monthly

Recomposition frequency

Liquidity and production

Equal weighted within broad sectors

Discretion of committee

World production

Weightingmethod

19Dow Jones UBS Commodity Index

19Thomson Reuters/ Jefferies CRB Index

38Rogers International Commodity Index

24S&P GSCI

# ofcommoditiesIndex

-100%

0%

100%

200%

300%

400%

500%

Oct-98 Apr-01 Oct-03 Mar-06 Sep-08 Feb-11

% accumulated US$ total return

-100%

0%

100%

200%

300%

400%

500%

S&P GSCI TR Thomson Reuters/Jefferies CRB Index TR

Rogers International Commodity Index TR DJ-UBS Commodity TR


Commodity index comparison

Source: Global ETF Research and Implementation Strategy Team, BlackRock, S&P, Dow Jones, Jefferies, RICI Handbook 2011.

S&PGSCI

Dow Jones UBSCommodity Index

Thomson Reuters JefferiesCRB Index

Rogers InternationalCommodity Index (RICI)

2.0%-2.7%0.6%$/metric tonZinc1.0%---$/metric tonTin1.0%1.0%2.4%0.8%$/metric tonNickel2.0%--0.5%$/metric tonLead4.0%6.0%7.5%4.0%$/metric tonCopper4.0%6.0%5.0%2.4%$/metric tonAluminium

14.0%13.0%17.6%8.3%Industrial metals1.8%–––$/troy ozPlatinum0.3%–––$/troy ozPalladium2.0%1.0%3.1%0.5%$/troy ozSilver3.0%6.0%9.8%2.9%$/troy ozGold7.1%7.0%12.9%3.4%Precious metals1.0%1.0%2.3%1.4%$cents/poundLean hogs

---0.4%$cents/poundFeeder cattle2.0%6.0%3.5%2.5%$cents/poundLive cattle3.0%7.0%5.7%4.3%Livestock3.0%6.0%10.9%3.2%$/mmBtuNatural gas1.2%--5.5%$/metric tonGas oil1.8%5.0%3.8%4.5%$cents/gallonHeating oil3.0%5.0%3.5%4.3%$cents/gallonRBOB gasoline

14.0%--14.3%$/barrelBrent crude oil21.0%23.0%14.6%34.6%$/barrelWTI crude oil44.0%39.0%32.7%66.5%Energy

Rogers InternationalCommodity Index

(RICI)

ThomsonReuters

Jefferies CRB

DJ UBSCommodity

IndexS&P

GSCIMeasureCommodity

1.0%---$cents/bushelsMilling wheat

100.0%100.0%100.0%100.0%TotalJan-11Dec-10Jan-11Dec-10Data as at:

0.1%---AUD/kilogramGreasy wool0.2%---JPY/bagAzuki beans0.3%---EUR/metric tonRapeseed0.5%---$cents/bushelsOats0.8%---$/cwtRice0.8%---CAD/metric tonCanola

1.0%---$/1k board fleetLumber1.0%---JPY/kilogramRubber0.6%1.0%--$cents/poundOrange juice1.0%5.0%-0.3%$/metric tonCocoa2.0%5.0%2.4%1.0%$cents/poundCoffee2.0%5.0%3.6%2.8%$cents/poundSugar4.2%5.0%2.3%1.8%$cents/poundCotton0.8%---$/short tonSoybean meal2.0%-2.9%-$cents/poundSoybean oil3.4%6.0%7.8%2.7%$cents/bushelsSoybeans4.8%6.0%7.4%4.3%$cents/bushelsCorn1.0%--0.8%$cents/bushelsKansas wheat4.8%1.0%4.7%3.8%$cents/bushelsWheat

31.9%34.0%31.1%17.4%Agriculture

Rogers InternationalCommodity Index

(RICI)

ThomsonReuters

Jefferies CRB

DJ UBSCommodity

IndexS&P

GSCIMeasureCommodity


Leveraged/inverse ETFs

• At the end of February 2011 there were 299 leveraged and inverse ETFs with US$39.7 Bn assets under management from 20 providers globally. There are currently 77 inverse/inverse leveraged ETFs in the United States and 109 inverse/inverse leveraged ETFs listed on exchanges outside the United States.

• These types of products are designed to rebalance daily which means that investors cannot expect the ETF to achieve its stated performance objective (-1x,-2x,+2x,+3x etc) over any period greater than one trading day. Investors can also use inverse (short) and leveraged inverse ETFs to implement hedges and short economic exposure.

• A significant effect on longer term returns is index volatility and its effect on compounding. In periods of high volatility the relationship breaks down as the effects of compounding become more pronounced, while in periods of low index volatility the effects are less apparent.

Note: For illustrative purposes only.Source: BlackRock.

% returnETF% returnETF% returnETF% returnIndexPeriod

-5.8%

14.8%

-11.8%

14.5%

-9.5%

-5.9%

-6.1%

-2.0%

5.9%

2.9%

-5.0%

94.20

82.04

92.98

81.17

89.72

95.33

101.48

103.59

97.78

95.00

100.00

Leveraged/inverse (x2)

-2.0%

7.4%

-5.9%

7.3%

-4.8%

-2.9%

-3.0%

-1.0%

3.0%

1.5%

-2.5%

98.00

91.25

96.95

90.38

94.89

97.77

100.83

101.87

98.93

97.50

100.00

Inverse(x1)

-2.1%

-14.8%

11.8%

-14.5%

9.5%

5.9%

6.1%

2.0%

-5.9%

2.9%

5.0%

97.89

114.92

102.82

120.32

109.86

103.76

97.83

95.87

101.93

105.00

100.00

Leveraged(x2)

0.0%

-7.4%

5.9%

-7.3%

4.8%

2.9%

3.0%

1.0%

-3.0%

1.5%

2.5%

Total

100.00Day 10

108.00Day 9

102.00Day 8

110.00Day 7

105.00Day 6

Example return series

102.00Day 5

99.00Day 4

98.00Day 3

101.00Day 2

102.50Day 1

100.00Start

Index


European ETF asset growth: physical and synthetic replication

Note: Synthetic replication refers to the use of derivatives to replicate the index performance such as swaps, futures, forwards, options etc. Physical replication refers to the use of physical securities such as stocks, bonds and commodities to generate the index performance. Hybrid replication refers to a combination of both physical and synthetic products. Data as at end February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

1,116

3

716

397

$299.1

$0.3

$134.1

$164.6

Feb-11

1,072829635423273165# ETFs total

3-----Hybrid

6835153831928927Synthetic

385314252231184138Physical

$284.0$226.9$142.7$128.5$89.7$54.9ETF AUM total

$0.3-----Hybrid

$128.6$101.9$66.4$48.0$25.6$13.6Synthetic

$155.1$125.0$76.4$80.6$64.1$41.3Physical

201020092008200720062005Assets (US$ Bn)

0

40

80

120

160

200

240

280

320

Assets US$ Bn

0

200

400

600

800

# ETFs

+63.3%

+43.3%

+11.1%

+59.0%

+25.2%+5.3%


ETFs listed globally by type of replication method

Note: Data as at February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

3.4--3.41--11--1Indonesia Stock ExchangeIndonesia386.2--386.215--1515--15National Stock Exchange

8.2--8.22--22--2Bombay Stock ExchangeIndia26,607.0-9,818.516,788.572-492343-2320Hong Kong Stock ExchangeHong Kong4,561.2--4,561.25--55--5Shenzhen Stock Exchange 6,716.9--6,716.915--1515--15Shanghai Stock ExchangeChina3,667.3-74.93,592.341-23920-218Australian Securities ExchangeAustralia

84871

30850

1977

1,481176774651

7211

408Total

2---1-3--------

-Hybrid

1425

36-

68-

25119

64---74

137Synthetic

70466

27250

1287

1,227165810651

657

271Physical

# total listings

NYSE ArcaNASDAQMexican Stock ExchangeBolsa Comercio SantiagoToronto Stock ExchangeBM&F Bovespa

Taiwan Stock ExchangeKorea Stock ExchangeSingapore Stock ExchangeNew Zealand Stock ExchangeBursa Malaysia Securities BerhadNagoya Stock ExchangeTokyo Stock ExchangeOsaka Securities Exchange

Exchange86,434.7-13,454.272,980.5298-61237Asia Pacific

1,793.4--1,793.47--7Brazil40,327.721.33,150.937,155.5169167101Canada

--------Chile8,382.2-13.38,368.819-217Mexico

30,396.4252.6

33,813.3-

507.52,335.2

---

312.4394.1

Synthetic

1425

216-9

16---64

Synthetic

979,628.9120.0945,695.71,1143895Americas

890,249.338,876.3

2,824.05,382.02,963.6391.0392.945.8

21,285.811,106.0

Total

84871

146721641

6911

Total

98.6859,754.22704-38,623.7-66US

-2,824.0-14Taiwan-4,874.5-58South Korea-628.4-5Singapore-391.0-6New Zealand-392.9-4Malaysia-45.8-1Malaysia-20,973.4-63-10,711.8-7Japan

HybridPhysicalHybridPhysicalCountry/region listed

AUM (US$ Mn)# ETFs

continued…


ETFs listed globally by type of replication method (continued)

Note: Data as at February 2011.Source: Global ETF Research and Implementation Strategy Team, BlackRock, Bloomberg.

----15-105----Burgundy

452.4-427.325.114-13114-131Irish Stock ExchangeIreland17.5--17.51--11--1Budapest Stock ExchangeHungary74.0--74.03--33--3Athens ExchangeGreece

----1--1----Latibex

----34-1024----Turquoise----50-2624----Chi-X (not an official exchange)

20.5--20.52--22--2Saudi Stock ExchangeSaudi Arabia8.9--8.91--11--1RTS Stock ExchangeRussia

31.7-31.7-3-213-21NYSE Euronext LisbonPortugal85.3-85.3-1-1-1-1-Warsaw Stock ExchangePoland

732.8-379.0353.86-426-42Oslo Stock ExchangeNorway334.2-113.0221.2108-337512-66NYSE Euronext AmsterdamNetherlands

2,698.8-1,553.91,144.9509-35215723-194Borsa ItalianaItaly

116,170.4-67,532.148,638.38091526282409-300109Deutsche Boerse----412-244168----Boerse StuttgartGermany

62,605.0-57,053.65,551.5484-341143261-23724NYSE Euronext ParisFrance279.3--279.31--11--1NASDAQ OMX HelsinkiFinland53.7-53.7-23-23-1-1-NYSE Euronext BrusselsBelgium

40,055.6-1,203.538,852.1615-403212114-2688SIX Swiss ExchangeSwitzerland

2,861.7-820.92,040.865-521325-187NASDAQ OMX StockholmSweden

1,345.1-205.71,139.467-59812-48Bolsa de MadridSpain2,236.5--2,236.526--2626--26Johannesburg Stock ExchangeSouth Africa

4.0--4.01--11--1Ljubljana Stock ExchangeSlovenia

99.3--99.321-1471--1Wiener BorseAustria

5,802

6281

12

3,913Total

7

3--

4Hybrid

2,858

3561-

2,470Synthetic

2,937

269-

12

1,439Physical

# total listings

London Stock ExchangeAbu DhabiIstanbul Stock Exchange

Exchange301,373.8345.8134,127.0166,901.11,1453717425Europe, Middle East and Africa (EMEA)

181,394.5

4,662.84.6-

Synthetic

994

851-

Synthetic

1,367,437.4465.71,185,577.22,55761,557Total

71,024.74.6

177.7

Total

2151

12

Total

345.866,016.23127United Kingdom----UAE-177.7-12Turkey

HybridPhysicalHybridPhysicalCountry/region listed

AUM (US$ Mn)# ETFs


Structures of ETFs and ETNs

General product features common to ETFs and ETNs are:

• Exchange traded.

• Easy accessible investment vehicles for a wide range ofasset classes.

• Low tracking error.

• Exposure to market risk of the asset class/index.

Specific features of physical ETFs are:

• Fund holds underlying securities in a ring-fenced separate account exposing the investor to no counterparty risk ofthe issuer.

• In the case of failure of the fund issuer, the investor has recourse directly to the pool of underlying shares or bonds.

• High transparency with regards to the holdings of the fund.

• Opportunity for additional income to further reduce costs(i.e. through securities lending inside the ETF) is better than for other ETPs as physical ETFs hold index securities.

• Multiple market-makers can create and redeem new shares with the fund company promoting a highly competitive pricing, both on- and off-exchange (‘multi-dealer model’).

Specific features of swap-based ETFs are:

• Fund holds a basket of securities (which can be different from the underlying index securities) and an index swap.

• The swap counterparty risk is limited to a maximum of 10% of the value of the fund under UCITS rules.

• The investor has recourse to the basket of securities in the case of failure of the fund issuer.

• Structure allows compliance with UCITS rules on more indices than physical ETFs (i.e. commodity ETFs).

• Sometimes tax advantages possible (i.e. avoidance ofstamp tax).

• While multiple market-makers can price swap-based ETFson- and off-exchange, every creation and redemption with the fund company generally involves a single swap counterparty.

Specific features of ETNs are:

• Investor owns a note, exposing the investor to the counterparty risk of the note issuer which is sometimes mitigated through collateral or guarantees.

• More flexibility to issue products, i.e. on single commoditiesand currencies.

• Possible access to structured product type solutions.


Structures of ETFs and ETNs (continued)

LimitedLimited for swap-based ETFsYes, possible for physical ETFsCompetitive multi-dealer model to trade on-and off-exchange

LimitedLimited for swap-based ETFsYes, full holdings disclosed for physical ETFsTransparency

Some notes are backed by physical assets or guarantees to decrease issuer riskSecurities lending and dividend enhancement activity2Other counterparty risk considerations

N/AYes, for swap-based ETFs but limited to 10% under UCITSNo, for physical ETFsSwap counterparty risk

Yes, full exposure to credit worthiness of note issuer

No, mutual funds hold assets in separate ring-fenced segregated accounts or a ring-fenced fund companyFund/note issuer risk

N/AIndex swap plus a basket of non-index securities for swap-based ETFsIndex securities for physical ETFsUnderlying holdings

NoYes1UCITS fund

NoteMutual fundStructure

YesYesExposure to market risk of the asset class/index

MostlyYesLow costs

YesYesLow tracking error

YesYesEasily accessible investment vehicles for a range of asset classes

YesYesExchange listed

Exchange Traded Notes (ETNs)Exchange Traded Funds (ETFs)

1. With exemptions possible.2. In addition to securities lending, the fund can earn extra income through dividend enhancement. Dividend enhancement describes partly recovering withholding taxes through the purchase of

listed single stock notes during the period of dividend payments.Source: BlackRock.


Example: iShares MSCI Emerging Markets: European versus United States listed funds

Key tax considerations

European listed ETF

(Irish domiciled)

Non-United States based investor

Local shares

(3.01% gross dividends)

United states listed ETF

(United states domiciled)

Non-United States based investor

Local shares

(3.01% gross dividends)

United states listed ETF

(United states domiciled)

United States based investor

Local shares

(3.01% Gross dividends)

Net dividends (9.91% withholding

[blended rate])

Gross dividends (no withholding out of the ETF)


[blended rate])

Net dividends (up to 30%2 withholding)


[blended rate])

Gross dividends (no withholding out of the ETF)

2.71% 2.71%

2.77% 1.94%1

2.77% 2.77%

1. Assumes impact of maximum rate.2. Maximum rate, lower rate may apply based on local tax treaties with United States.Note: The information given does not constitute tax or legal advice and prospective investors should consult their own professional advisers as to the implications of their subscribing for,purchasing, holding, switching or disposing of shares under the laws of the jurisdiction in which they may be subject to tax. Tax legislation may change.Source: BlackRock, July 2009.


Delta 1 products comparison

Single dealerExchange dealersExchange dealersLiquidity provided

OTC derivativeListed derivativeFundLegal structure

NoNoYesAvailable to lend

No

1 share

Yes

Total Expense Ratio (TER)

Commission, bid/ask spread

ETFs

Monthly, quarterly

1 contract

No

Roll, basis risk, margin

Commission, bid/ask spread

Futures

FixedExpiry

Variable on exposureMinimum trade size

NoTracking error

FinancingHolding cost

Usually commissionRound trip execution costs

Swaps


Liquidity: the ETF transaction process

1. ETF or Creation Basket.

Secondary marketPrimary market

ETF manager Investor

Exchange

ETF market makers/broker

Securities

ETF

Cash (OTC)

ETF

Cash

ETF¹


Appendix: regulatory update

FINRA regulatory notice 09-31

FINRA, the Financial Industry Regulatory Authority which regulates all securities firms doing business in the United States, issued a regulatory notice inJune 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 December 1, 2008, and April 30, 2009:

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

• An ETF seeking to deliver three times the daily return of the Russell 1000 Financial Services Index fell 53 percent while the index actually gained around 8 percent. The related ETF seeking to deliver three times the inverse of the index's daily return declined by 90 percent 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 percent; but in the more volatile scenario the inverse ETF loses 1.82 percent. 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.


Appendix: regulatory update (continued)

UK Retail Distribution Review (RDR) update

The use of ETFs is likely to increase significantly by Independent Financial Advisors (IFAs) in the United Kingdom based on the regulatory proposals outlined in RDR feedback statement by the United Kingdom’s FSA.

In January 2011, the FSA published the final rules on professional standards (PS11/1). This paper completes the rules on RDR along with those on advisor charging and the labelling of services, which were finalised in March 2010. The new framework will come into effect at the end of 2012.

The four key aims of this FSA policy are to:

• Improve the clarity with which firms describe their services to consumers.

• Make sure the cost of advisor services is agreed between adviser and client, rather than determined by product providers.

• Increase the professional standards of investment advisors.

• Ensure personal investment firms have adequate capital resources for complaint redress.

The RDR is designed to provide a clean and sustainable market for the future. It will ensure that customers get good quality advice, products and services suited to their needs, from advisors displaying higher standards of professionalism and expertise. The regime needs to change and this change will be supported by the FSA’s intensive supervisory approach which will include a greater focus on individuals.

Clarity of advice services

On 26 March 2010, the 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 advisor firms describe their services to consumers.

The FSA proposals required that firms describe their advice services as either ‘independent’ or ‘restricted’. Firms offering independent advice would need to demonstrate that their recommendations were based on a comprehensive and unbiased analysis of the market and that any products selected were made in the interests of clients.

If a firm elected to limit its product range to certain investments or strategies, it needed to describe the services it offered as ‘restricted’ and this fact must needed to be clearly disclosed to the consumer.

Source: Retail Distribution Review Newsletter, February 2011, Financial Services Authority; Policy Statement 11/1, Distribution of retail investments: Delivering the RDR – professionalism, Financial Services Authority; Policy Statement 10/6, Distribution of retail investments: Delivering the RDR – feedback to CP09/18 and final rules Financial Services Authority; Feedback to CP10/14 and CP10/22 and final rules, Financial Services Authority; Financial Services Authority; BlackRock.



UK Retail Distribution Review (RDR) update (continued)

Clarity of advice services (continued)

The FSA also noted that it may be possible for certain advisors servicing specialist client groups to retain the independence ‘label’ even where certain products were 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.

In addition, the FSA observed that this exception was unlikely to be of benefit to most firms since most retail investment products were likely to be appropriate for the vast majority of retail investors.

Separately, the FSA noted it was clear from responses received that it was not widely understood that ETFs already fell within the current definition of packaged products and for the avoidance of doubt, it made clear that any products which might achieve similar outcomes as more traditional retail investment products were potentially caught by the new rules.

Remuneration

On 26 March 2010, the FSA published its feedback statement (Policy Statement 10/6) to its Consultation Paper of June 2009 (CP09/18) relating to the introduction of a system of ‘adviser-charging’ to remove the potential commission-bias through the influence of product providers.

The FSA stated they would modernise the way that advice was 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 was clear to consumers whenever it was given. The FSA also noted that it wanted adviser firms to have charging structures that were product neutral in that the charges reflected the services provided to the client, not the particular product provider or type of product. The Policy Statement contained final rules in relation to ‘adviser-charging’ and ‘service-labelling’ and the FSA stated that they would proceed with the proposals set out in the consultation. As a result of this, it was expected that with effect from 1 January 2013, advisers would be prevented from receiving commissions paid by product providers.

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. The 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. These changes would be significant as many IFAs were ‘tied’ and ‘multi-tied’, which respectively described those selling only the products of one provider, such as in a bank, and those selling products from a limited range of providers.

Source: Retail Distribution Review Newsletter, February 2011, Financial Services Authority; Policy Statement 10/6, Distribution of retail investments: Delivering the RDR – feedback to CP09/18and final rules, Financial Services Authority; Feedback to CP10/14 and CP10/22 and final rules; Financial Services Authority; BlackRock.




Remuneration (continued)

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 the FSA states that it intends to consult further on whether any rebates should be prohibited. In addition, the FSA will proceed with proposals for advisers to describe the advice provided as either independent or ‘restricted’.

Professional standards of advisers

On 20 January 2011, FSA published its feedback statement and final rules (Policy Statement 11/1) relating to the professional standards ofinvestment advisers.

The scope of the changes set out in the paper covers all investment advisers, whether they will offer independent or restricted advice, covering advisers within all types of firms (e.g. banks, product providers, and Independent Financial Advisers or wealth managers).

The FSA confirmed that, after extensive consultation, retail investment advisers will need to hold a Statement of Professional Standing (SPS) if they want to give independent or restricted advice after January 2013. The statement will provide customers with evidence that the adviser subscribes to a code of ethics, is qualified, and has kept their knowledge up to date.

When the RDR comes into force in January 2013, the FSA will start collecting information about individual advisers, such as the qualifications they hold and which accredited body they use. However, in preparation for 2013, the first of the Professionalism rules will come into force in July 2011, and from this point firms will be obliged to notify the FSA if any adviser falls below the required standard of competence or ethical behaviour.

Initial and ongoing knowledge

Advisers deemed competent on or before 30 June 2009 will need to attain an appropriate qualification by the end of 2012. Advisers who are assessed as competent after June 2009 must attain an appropriate qualification within 30 months of starting.

Advisers holding certain appropriate qualifications do not need to take further exams to meet RDR standards, but are likely to need to carry out qualifications gap-fill using relevant structured Continuing Professional Development (CPD).CPD activity carried out in the past can be used towards this gap filling, where it meets a learning outcome set out in the gap fill template. Advisers will need to have this qualification gap fill verified by an accredited body.

Source: Retail Distribution Review Newsletter, February 2011, Financial Services Authority. Policy Statement 10/6, Distribution of retail investments: Delivering the RDR – feedback to CP09/18and final rules, Financial Services Authority; Policy Statement 11/1, Distribution of retail investments: Delivering the RDR – professionalism, Financial Services Authority; Feedback to CP10/14 and CP10/22 and final rules, Financial Services Authority; Financial Services Authority; BlackRock.




Statement of Professional Standing (SPS)

From 1 January 2013, advisers will be required to have obtained an annual SPS from an accredited body. The statement will provide customers withevidence that the adviser has subscribed to a code of ethics, is qualified, and has kept their knowledge up-to-date. The FSA has not introduced a rulerequiring firms or advisers to present the adviser’s SPS to consumers, but expects that some advisers will choose to do this to help raise consumers’awareness of the profession.

RDR timetable

2011 publications:

• Consultation Paper – RDR-related changes to complaints reporting.

• Consultation Paper – product disclosure changes to reflect adviser charging.

• Policy Statement – platforms.

• Consultation Paper – capital requirements: how to apply a consistent approach to the Expenditure Based Requirements (EBR).

Actions for firms, advisers and providers:

• End 2011 – Personal Investment Firms (PIFs) should hold a minimum of one-month EBR (minimum £15,000).

• End 2012 – advisers should hold an appropriate qualification including gap-filling, where required.

• End 2012 – all advisers and product providers must be ready to operate adviser charging and consultancy charging and meet theassociated requirements.

• End 2012 – all advisers should describe their services as either independent or restricted.

• End 2013 – PIFs should hold a minimum of three-months EBR (minimum £20,000).

Source: Retail Distribution Review Newsletter, February 2011, Financial Services Authority; BlackRock.




In the United States, 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 United Kingdom the use of ETFs among IFAs is very limited as they are typically tied and multi-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.

The role of platforms in a RDR world

One area of growing importance is the platforms market. In November 2010 the FSA published a Consultation Paper (CP10/29) on this topic.

The FSA’s aim is to:

• Prevent product providers from making payments that advisers could use to disguise the charge the customer is paying for advice, which could influence advisers in recommending one product over another. Allowing such payments could undermine what the FSA has set out to achieve for consumers by removing commission bias and could leave product charges at an artificially high level.

• Ensure platforms and other nominee services allow their customers to transfer their investments elsewhere without having to cash them in first (re-registration).

• Require platforms to be upfront about the income they receive from fund managers or product providers. This will make it easier for advisers and consumers to compare different types of platform and the services provided.

• Make sure that customers who invest in funds through platforms and other nominee services are provided with information about the fund from their fund managers, and maintain their voting rights.

The consultation period closed on 17 February 2011 and the FSA plans to issue a Policy Statement later this year.

Source: Retail Distribution Review Newsletter, February 2011, Financial Services Authority; Feedback to CP10/14 and CP10/22 and final rules, Financial Services Authority; Financial Services Authority; BlackRock.



Australia’s future of financial advice reform

The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, said that the Future of Financial Advice reforms are designedto tackle conflicts of interest that have threatened the quality of financial advice that has been provided to Australian investors, and the mis-selling offinancial products.

• No more new commissions from 2012. Ban on commissions and volume-based payments and any other type of remuneration structure that creates a conflict of interest for the adviser. The ban applies to all retail investment products including managed investments, superannuation and margin loans but the ban won’t apply to risk insurance products.

• Must act in the best interests of clients. From 1 July 2012, all financial advisers will be subject to a statutory fiduciary duty to act in the best interestsof clients.

• Introduction of ‘product neutral’ adviser charging regime.

• Advisers can charge asset-based fees, but not on borrowed money. The client must agree with the asset-based fee. One of the greediest tactics used by some commission-based advisers was to recommend that a client borrow money to invest, and then charge a commission on the borrowed money as well.

• Remove exemption for accountants to provide advice on self-managed super funds (SMSFs). This change will cause quite a few ripples in the accounting profession, but there is positive news for this sector. The Government also mentions introducing a streamlined licensing regime for accountants advising on SMSFs.

• Simpler disclosure information for clients. Financial Services Guides (FSG) must be more effective at disclosing any restrictions on the adviser when providing advice, any potential conflicts of interest and how the adviser is remunerated.

• ASIC (Australian Securities and Investments Commission) to be given more powers to ban individuals from providing advice.

• Review definitions of retail (unsophisticated) or wholesale (sophisticated) clients.

• Review of professional standards for financial advisers. The Government will appoint a panel to review professional standards, including conduct and competency standards, and potentially a code of ethics.

• Consider possibility of introducing a statutory compensation scheme to compensate clients of financial advisers.

Source: Super Guide, Treasury Ministers Portal, The Future of Financial Advice, Information Pack, 26 April 2010.



SEC-FINRA investor alert on leveraged and inverse etfs1

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 dailybasis. 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.”

CFTC hearings on energy position limits and hedge exemptions2

The United States Commodity Futures Trading Commission (CFTC) held hearings regarding Energy Position Limits and Hedge Exemptions on 28 July 2009, 29 July 2009, and 5 August 2009, discussing 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.

As a result, a number of ETPs/ETFs providing exposure to commodities issued notices that they have suspended their creation process.

1. Source: Leveraged and Inverse ETFs: Specialized Products with Extra Risks for Buy-and-Hold Investors, Financial Industry Regulatory Authority.2. Source: Hearings on Energy Position Limits and Hedge Exemptions, U.S. Commodity Futures Trading Commission.



SEC approves new stock-by-stock circuit breaker rules1

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 minutes.

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 were in effect on a pilot basis through to 10 December 2010.

SEC approves rules expanding stock-by-stock circuit breakers and clarifying process for breaking erroneous trades2

On 10 September 2010, the Securities and Exchange Commission (SEC) approved new rules submitted by the national securities exchanges and FINRA to expand a recently-adopted circuit breaker program to include all stocks in the Russell 1000 Index and certain exchange-traded funds. The SEC also approved new exchange and FINRA rules that clarify the process for breaking erroneous trades.

The circuit breaker pilot program was approved in June in response to the market disruption of 6 May and currently applies to stocks listed in the S&P 500 Index. Trading in a security included in the program is paused for a five-minute period if the security experiences a 10 percent price change over the preceding five minutes. The pause gives the markets an opportunity to attract new trading interest in an affected stock, establish a reasonable market price, and resume trading in a fair and orderly fashion. The circuit breaker program was in effect on a pilot basis through to 10 December 2010.

1. Source: Press Release: SEC approves New Stock-by-Stock Circuit Breaker Rules, 2010-98, U.S. Securities and Exchange Commission. Bloomberg.2. Source: Press Release: SEC Approves Rules Expanding Stock-by-Stock Circuit Breakers and Clarifying Process for Breaking Erroneous Trades, 2010-167, U.S. Securities and

Exchange Commission.


The legal and structural strength of ETFs

The Financial Times Alphaville blog posting, “Can ETFs Collapse?” and subsequent media coverage on CNBC explores a theory that BlackRock has researched and addressed many times in the past. It is our assessment that the blog's conclusions regarding the “unfunded liability” caused by ETF short selling is incorrect and does not take into account the general mechanics of the ETF structure and marketplace. The primary reasons for their inaccuracies areas follows:

The legal and structural design of ETFs protects ETF shareholders

All orders for creation and redemption of shares of a fund must be in proper form when placed to ensure that such orders will be settled. The requirements for proper form are addressed in each prospectus and Statement of Additional Information (SAI) and provide the funds with the right to refuse any order (creation or redemption) that is deemed to be placed in improper form. Requirements for proper form may be impacted based on size of the order, market and volatility conditions. Any concern regarding the form of an AP’s order may cause the ETF provider to request additional information from the AP to validate the AP’s ability to settle an order prior to accepting that order.

Differences in “naked” and bona fide short selling

Naked short selling is when the seller does not borrow or arrange to borrow for the securities in time to make delivery to the buyer within the standard three-day settlement period. While naked shorting may occur for bona fide market making, it is not legal to sell securities short and fail to deliver shares at the time of settlement with the purpose of driving down a security’s price.

Bona fide short selling is a necessary part of functioning market making practices. This activity improves secondary market liquidity for an ETF represented through tighter bid/ask spreads, which benefit all investors seeking to buy or sell a fund.

Counter party risk is minimised in ETFs

The assets in an exchange traded fund are separate and distinct from the assets of the various service providers such as asset managers, index providers, custodians, etc. Generally, the ETF is not directly subject to the credit risk of a service provider.


Source: BlackRock, The Legal and Structural Strengths of ETFs, September 2010.



SEC proposal to replace rule 12b-11

The Securities and Exchange Commission (SEC) is proposing a new rule and rule amendments that would replace rule 12b–1 under the Investment Company Act, the rule that has permitted registered open-end management investment companies (‘‘mutual funds’’ or ‘‘funds’’) to use fund assets to pay for the cost of promoting sales of fund shares. The new rule and amendments would continue to allow funds to bear promotional costs within certain limits, and would also preserve the ability of funds to provide investors with alternatives for paying sales charges. Unlike the current rule 12b–1 framework, the proposed rules would limit the cumulative sales charges each investor pays, no matter how they are imposed. To help investors make better-informed choices when selecting a fund that imposes sales charges, the Commission is also proposing to require clearer disclosure about all sales charges in fund prospectuses, annual and semi-annual reports to shareholders, and in investor confirmation statements.

As part of the new regulatory framework, the Commission is proposing to give funds and their underwriters the option of offering classes of shares that could be sold by dealers with sales charges set at competitively established rates – rates that could better reflect the services offered by the particular intermediary and the value investors place on those services. For funds electing this option, the proposal would provide relief from restrictions that currently limit retail price competition for distribution services.

The proposed rule and rule amendments are designed to protect individual investors from paying disproportionate amounts of sales charges in certain share classes, promote investor understanding of fees, eliminate outdated requirements, provide a more appropriate role for fund directors, and allow greater competition among funds and intermediaries in setting sales loads and distribution fees generally.

SEC evaluating the use of derivatives by funds2

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, exchange-traded 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.

1. Source: Federal Register, Mutual Fund Distribution Fees; Confirmations; Proposed Rule, August 4, 2010, Securities and Exchange Commission. 2. Source: Press Release: SEC Staff Evaluating the Use of Derivatives by Funds, 2010-45, U.S. Securities and Exchange Commission.



Changes to United States tax law may affect non-United States resident holders of United States ETFs

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

The three effected flow-through benefits are:

• Exemption from U.S. 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 U.S. resident issuers (i.e., obligations issued by Treasury and U.S. corporations). This applied to fixed income ETFs.

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

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

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

FATCA (foreign account withholding provisions in the HIRE Act)

On 18 March 2010, the United States Congress passed the Hiring Incentives to Restore Employment Act of 2010 (the HIRE Act). This Act contains provisions still commonly known as the FATCA (the Foreign Account Tax Compliance Act).

The FATCA is a system designed to request financial institutions of all descriptions around the world to identify United States investors – even where they hold indirectly via non-United States entities – and report details of these to the United States Internal Revenue Service (IRS).

Source: BlackRock, April 2010.



Changes to United States tax law may affect non-United States resident holders of United States ETFs (continued)

FATCA (foreign account withholding provisions in the HIRE Act) (continued)

This initiated in response to high levels of political concern in the United States with regards to tax evasion, particularly by wealthy individuals.

In order to encourage compliance with this legislation, from 1 January 2013, the United State will impose a 30% withholding tax on the gross sales proceeds (as well as income) derived by any part of that financial institution from holdings of United States 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), therefore the FATCA goes much wider in reach than the existing ‘Qualified Intermediary’ system, with which it will coexist.

The impacts on the financial world will undoubtedly be complex and potentially far reaching. The basic wording of the HIRE Act still leaves many questions unanswered and the financial institutions are keenly waiting for draft regulations to be issued by the United States Treasury.

However, it does appear that holdings of United States ETFs by non-United States investors would be subject to the 30% withholding from gross sales proceeds, where held through a non-United States financial intermediary who does not become FATCA compliant when the regime goes live in 2013.

Source: BlackRock, April 2010.


2011 ETF ecosystem

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

ETFs

ETNs

ETCsETVs

ETPs

Investor

Regulations

Fundratings

ETFresearch:

banks,brokers,

managers

ETF portals,websites,centres

Fundsupermarkets

Consultants

Tax

Manager/provider

Exchange

MarketmakerLiquidity

provider

Indexprovider


About us

About BlackRock

• BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. As at31 December 2010, BlackRock's AUM was US$3.561 trillion.

• BlackRock offers products that span the risk spectrum to meet clients' needs, including active, enhanced and index strategies across markets and asset classes. Products are offered in a variety of structures including separate accounts, mutual funds, iShares ETPs, and other pooled investment vehicles.

• BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions.

• Headquartered in New York City, as at 31 December 2010, the firm has approximately 9,100 employees in 25 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit BlackRock's website at www.blackrock.com.

About BlackRock’s Global ETF Research and Implementation Strategy Team

• BlackRock's Global ETF Research and Implementation Strategy Team is regarded as the industry's pre-eminent source of data, analysis and perspective on the ETF/ETP marketplace worldwide.

• While the team's focus is ETFs/ETPs, the team operates independently from the iShares business and provides an independent source of marketplace research and advice to clients on the implementation of asset allocation strategies using ETFs and ETPs.

• Led by Deborah Fuhr, Managing Director, the team produces the 'ETF Landscape' reports, a comprehensive series of weekly, monthly, and quarterly ETF market commentaries as well as handbooks covering all ETFs and ETPs from all 169 providers (as at 31 December 2010).

• The scope of research is unequalled industry-wide, covering the world as well as all major regional markets and ETF genres, with a focus on North America, Latin America, Europe, the Middle East, Asia, and Japan.

• The research produced is a key source of expertise and comment for representatives of global exchanges, regulatory bodies and the financial media.

• Through the team's timely and comprehensive research and market insight, BlackRock demonstrates its dedication to the industry by building greater market understanding of the dynamic ETF vehicle and supporting the efforts of all market participants to realise optimal investment value from theETF approach.


ETF Landscape reports

ETF Landscape quarterly global handbook

• Includes the price tickers, index tickers, annual total expense ratio (TER), dividend policy, fund structure, assets under management (AUM), average daily volume, index replication method as well as the websites for the providers, exchanges, and index providers to assist in comparing the various products that are currently available.

ETF Landscape monthly industry review

• Provides an up-to-date snapshot of the latest key industry trends with a view to helping professional investors make moreinformed decisions

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Disclaimer

Regulatory information• BlackRock Advisors (UK) Limited (‘BlackRock’), which is authorised and regulated by the Financial Services Authority in the UK, has issued this

document for access by professional clients and for information purposes only. This document or any portion hereof may not be reprinted, sold or redistributed without authorisation from BlackRock.

• This communication is being made available to persons who are investment professionals as that term is defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion Order) 2005 or its equivalent under any other applicable law or regulation in the relevant jurisdiction. It is directed at persons who have professional experience in matters relating to investments.

• This document is an independent market commentary document based on publicly available information and is produced by the ETF Research and Implementation Strategy team. Specifically, this is not marketing nor is it an offer to buy or sell any security or to participate in any trading strategy. Affiliated companies of BlackRock may make markets in the securities of ETFs and provide ETFs in the form of iShares. Further, BlackRock and/or its affiliated companies and/or their employees may from time to time hold shares or holdings in the underlying shares of, or options on, any security of ETFs and may as principal or agent buy securities in ETFs.

• The opinions expressed are those of BlackRock as of February 2011, and are subject to change at any time due to changes in market or economic conditions. They should not be construed as a recommendation, investment advice, offer or solicitation to buy or sell any securities or to adopt any investment strategy. In particular, BlackRock has not performed any due diligence on products which are not managed by BlackRock and accordingly does not make any remark on their suitability. Prospective investors should take their own independent advice prior to making an investment decision.

• 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. BlackRock recommends that investors independently evaluate each issuer, security or instrument discussed in this publication and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

• The value of and income from any investment may go up or down and an investor may not get back the amount invested. The value of the investment involving exposure to foreign currencies can be affected by exchange rate movements. We also remind you that the levels and bases of, and reliefs from, taxation can change and is dependent upon individual circumstances.

• Although BlackRock endeavours to update and ensure the accuracy of the content of this document BlackRock does not warrant or guarantee its accuracy or correctness. Despite the exercise of all due care, some information in this document may have changed since publication. Investors should obtain and read the ETF prospectuses from the ETF Providers and confirm any relevant information with ETF Providers before investing. Neither BlackRock, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

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etf landscape industry highlights, february 2011...followed by vanguard with 66 etfs, assets of...

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