0. Improving Client Outcomes
iShares play an important role in efficient portfolios

1. Barclays Global Investors
One of the world's largest institutional asset managers
$2.0 trillion AUM*
3,004 clients in 54 countries*
Managing 2300 funds**
Tracking over 250 indices worldwide**
12 locations, over 3000 staff***
iShares, Exchange Traded Funds from Barclays
*Source: Barclays Global Investors (BGI), November 2007
**Source: Barclays Global Investors (BGI), May 2007
***Source: Barclays Global Investors (BGI), September 2007
SNUG060606Q2

2. iShares - Global business focusing on Local needs
GERMANY 80 FUNDS
iSHARES.EU
DUBLIN
62 FUNDS
iSHARES.EU
US 159 FUNDS iSHARES.COM
CANADA 24 FUNDS iSHARES.CA
HONG KONG 3 FUNDS iSHARES.COM.HK
European listings on: 7 exchanges
London Stock Exchange
Euronext Paris
Eurolist by Euronext Amsterdam
Deutsche Börse (XTF Exchange Traded Funds Segment)
Borsa Italiana
SWX Swiss Exchange
Virt-x
European listings on: 5 exchanges
Deutsche Börse (XTF Exchange Traded Funds Segment)
Euronext Paris
SWX Swiss Exchange
Vienna Stock Exchange
Borsa Italiana
As of 13 May, 2008

3. Global ETF AUM Is Forecast to Reach $2trl by 2011
The Global ETF Market Has Experienced Strong Growth Since 2000 – Both in Terms of AUM & Funds
Global ETF Market Growth (AUM & No. of Funds)
US CAGR ( ) = 37%
Europe CAGR ( ) = 114%
Global CAGR* ( ) = 40%
Global ETF AUM Is Forecast to Reach $2trl by 2011
Source: Morgan Stanley, Exchange Traded Funds – Q Global Industry Review, 31 March 2008
* Compound annual growth rate

4. ETF Usage within Private Client Portfolios
Current
Future
Discretionary Management
Tactical access to markets
New Cash deployment
Manager search & transition
Advisory Mandate
Client driven demand
Difficult to access asset classes
Business Considerations
No retrocession on iShares
Can not trade ETFs
Discretionary Management
Fee based environment
Strategic “Core”& tactical “Satellites”
Active Risk Budgeting
Advisory Mandate
ETF Wrap model portfolios
Small account aggregation
Business Considerations
Fiduciary responsibility to clients
Regulatory changes
Minimization of manager blow-ups

5. Quick review of Modern Portfolio Theory
Optimal mix of asset class benchmarks
Alternatives
Commodities
Developed Equity
Potential return (%)
Fixed Income
Cash
Potential risk (%)
Blending uncorrelated assets creates Efficient Frontier
Source: Markowitz, “Portfolio Selection”, The Journal of Finance, March 1952

6. So which asset class performs best?
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
+10%
+11%
+12%
+24%
-12%
+26%
+14%
+13%
+1%
+9%
-20%
-27%
+2%
+24%
-3%
+21%
+26%
+32%
+13%
-28%
-30%
+8%
+32%
+25%
+11%
+37%
+76%
+29%
-24%
+12%
-14%
-8%
+25%
+17%
+30%
+24%
+22%
-31%
-25%
-12%
-6%
+33%
+26%
+35%
-2%
+66%
+56%
+9%
-7%
+15%
-8%
+14%
+3%
-4%
+41%
+42%
+38%
+7%
+16%
+5%
+15%
-6%
-4%
+40%
+14%
+19%
+15%
-8%
-12%
+31%
+37%
+30%
+19%
-9%
+7%
+13%
-10%
+16%
+27%
+3%
LEGEND AND DATA SOURCES
Commodities Source: Dow Jones – AIG Commodity Index - Total return
Infrastructure Source: Macquarie Global Infrastructure 100 Index – Total return
Emerging markets debt Source: JP Morgan Emerging Markets Bond Index - Total return
Property Source: FTSE EPRA/NAREIT Global Index – Total return Private equity Source: LPX Private Equity Index – Total Return
Convertible bonds Source: UBS Global Convertible Corporate Bond Index – Total return
Developed equity Source: MSCI World Equity Hedged Index – Total return
High yield bonds Source: Merrill Lynch Euro High Yield Index – Total return
Emerging markets equity Source: MSCI Emerging markets US$ Index – Total return
All returns are shown in US dollars
Spread of returns between highest and lowest performing strategies
40%
49%
37%
62%
32%
54%
43%
33%
30%
40%
Sources: Please refer to notes below.

7. Asset Allocation plays largest role in portfolio performance
Academic research:
Asset mix determines around 90% of variation in fund returns¹
But, not a one-off decision – must be revisited regularly²
Investors today have access to many more asset classes and financial instruments
Implementation easier today than yesteryear – more asset classes, better products
Time to revisit client’s strategic asset allocation ß α
“Determinants of Portfolio Performance”, Brinson, Hood & Beebower, 1986; "Asset Allocation Dynamics and Pension Fund Performance“, Blake et al, 1999
“Strategic Asset Allocation: Portfolio Choice for Long-Term Investors”, Campbell & Viciera, 2002

8. How do active managers add value?
Total Return
Positive Alpha
Participating in the asset class
Skill or luck
Beta 0%
Negative Alpha

9. Managing your active manager risk

10. Ingredients of investment management
Science (Modern Portfolio Theory) +
Art (Implementation – strategic and tactical) +
Managing Client Emotions (Fear, greed, tax aversion)

11. Why index a portion of a client portfolio?
Consistency and reliability of long term returns relative to the market
Low Cost Diversification:
buy the market
no active manager risk
no surprises
More time for your business
Client facing activity
Overall business strategy
To research & implement an asset allocation
Low supervisory burden
Control Active Manager Risk
Index funds provide margin of safety

12. Active portfolio management presents “active manager risk”
Active manager return
The over- or under-return earned by an active manager relative to a benchmark
Active manager risk
The annualized standard deviation of a manager’s active return (usually calculated as tracking error)

13. Active Manager Risk Hypothetical
Active return vs. Equity benchmark
10-year annual active return: 0.24%
10-year annual tracking error: 5.80%
Equity Index return
Annual active return: -2.53% Annual tracking error: 5.22%
Annual active return: 2.11% Annual tracking error: 6.10%
-10 -5 5 10
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Active return (%)
For illustration only. Not indicative of any investment or manager.

14. Active Manager Risk Hypothetical
2% active risk budget
60% Equity Index / 40% large cap active manager
Annual active return: -0.97% Annual tracking error: 2.00%
Equity Index return
Annual active return: -2.53% Annual tracking error: 5.22%
Annual active return: 2.11% Annual tracking error: 6.10%
-10 -5 5 10
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Active return (%)
For illustration only. Not indicative of any investment or manager.
100% active manager
Portfolio with a 2% active risk budget

15. Active Manager Risks – other considerations
Manager Turnover
Style drift
Unknown portfolios (hidden risk)
Explaining underperformance to your clients
Costs to “be in the game”
Trading cost
Research cost
Manager marketing cost
Risks need to be monitored and controlled

16. Core-Satellite portfolio construction
Measuring risk within a portfolio
How can active manager risk, introduced to the portfolio by active managers, be controlled?
Setting a specific risk budget
How can active managers and index managers be held within the same portfolio?
What is the overall impact to the portfolio?
How many managers, how much to each?
What tools and resources do Barclays Global Investors make available?

17. ETFs Can Enhance Risk Adjusted Portfolio Returns
Core
Optimal strategic asset allocation decisions (betas): allow investors to achieve optimal trade-off
Objective: generate lowest possible risk for given expected return
Satellites
Active investment decisions (alphas): aim at shifting the efficient frontier
Objective: outperform the reference benchmark for a given level of risk
Core + Satellite
Active satellites
Original Core Portfolio
Optimized Core
Risk
This example is provided for illustration purposes only. It does not represent a current investment recommendation.

18. Core-Satellite: ETFs Can be Used in the Core or Satellite
ETF(s) in the Core :
Broad market indices
FTSE 100, MSCI Europe ex UK, MSCI Emerging Markets
£ Gilts, Inflation, € Corporate
Exposure to diversified baskets of securities
Optimized Core: sector, style or country indices
ETF in the Satellite :
Concentrated, focused ETFs:
Sector and style
Individual countries and regions
Alternative asset class
Over/under weight tactical allocations
ETF(s)
Active Strategy 3
Active Strategy 1
Active Strategy 2
Core:
Broad benchmark exposures
Easily adjusted for TAA
Can be optimized
Portfolio
ETF Satellite
ETF
Satellite
ETF Satellite

19. iShares Asset Class Illustrator
Diversification can lower risk, increase return
This example is provided for illustration purposes only. It does not represent a current investment recommendation.

20. Efficient portfolio management
Same risk / higher return
Expected return
Less risk / same return
Current portfolio
Risk (volatility)
This example is provided for illustration purposes only. It does not represent a current investment recommendation.

21. iShares Asset Class Illustrator

22. Lower Total Cost of Ownership & improving risk/reward using iShares
TER
Return
Risk
Return / Risk
All Active Funds
1.50%
12.00%
18.00%
0.67
All iShares
0.40%
13.10%
12.50%
1.05
Blended 50/50
0.95%
12.55%
14.44%
0.87
Lowering costs to client leads to improved outcomes
Risk is not linear, and is greatly reduced by adding less volatile investments
σport = √ (wa2 σa2 + wb2σb2 + 2wawbρabσaσb)
Figures are for illustrative purposes only
Combined portfolio risk assumes correlation of 1 between two portfolios

23. Why is the risk/reward ratio improved with an iShares allocation?
Index Returns
3 yr
5 yr
Morningstar category
Index
3 Yr
5 Yr
# Below Index
Total
% Below Index
Emerging Market Equity
MSCI Emerging Market
23.39%
27.60%
190
244
78%
140
199
70%
Euro Equity Large Cap
MSCI Europe
9.27%
14.88%
1,065
1,460
73%
895
1,197
75%
UK Large Cap Equity
FTSE 100
9.41%
13.80%
604
645
94%
464
553
84%
Euro Fixed Income
Lehman Euro Aggregate
2.41%
3.45%
1,985
2,404
83%
1,788
1,923
93%
Active Fund Underperformance
Alpha is elusive, yet active risk is always present
Morningstar, 28/2/08 data of fund share classes underperforming category benchmark, BGI analysis

24. Active managers face a TER “headwind”
Average Total Expense Ratio (TER) comparisons in Europe
Type of Fund
Exchange Traded Funds*
Average Expense Ratio
(bps)
European Sector Exposure
Eurozone Sector Exposure
US Sector Exposure
Global Exposure
Country Exposure Europe
Country Exposure United States
International/Emerging Markets
Style
Regional Exposure Europe
Regional Exposure Eurozone
Fixed Income
Commodities
All Equity
Overall ETF 39 38 55 61 40 62 67 53 43 19 50 49 45
Open-Ended Mutual Funds**
Average Active Fund TER
Average Index Fund TER
Average Bond Fund TER
171 91
103
Source: Lipper, Morgan Stanley Investment Strategies.
*As of end December 2007
*Although these investment vehicles may be similar to ETFs, they are not identical and may offer additional benefits to investors over ETFs, such as increased
returns and customized investment management.
**As of end December 2007, for funds with a Q4 fiscal year end, the data used in the average are from 2006.

25. Headline TER is not the “Effective TER” - Lending Inside iShares Funds
Securities Lending Returns to the Fund**
TER
Effective TER
DJ Euro STOXX 50
0.27%
0.35%
0.08%
DJ STOXX 50
0.18%
0.17%
FTSE Eurofirst 80
0.25%
0.40%
0.15%
FTSE/Xinhua China 25
0.74%
0.49%
DJ Euro STOXX Mid Cap
DJ Euro STOXX Select Dividend
DJ Euro STOXX Small Cap
0.13%
FTSE Eurofirst 100
0.12%
0.28%
MSCI Eastern Europe 10/40
0.09%
0.65%
S&P 500
0.32%
Return levels depend on demand for the underlying securities inside the fund
High lending yield in European iShares is due to yield enhancement trades
In emerging market countries scarcity of assets is a primary demand driver
Actual historic returns
Funds TER are subject to additional costs, such as trading, rebalancing, stamp (where applicable)
** Source: BGI, most recent audited financials (US audited 31/08/07, DJ Euro Stoxx 50 30/09/2006, all other Dublin iShares as of 28/02/07)

26. Indexation is anything but passive

27. Philosophy remains unchanged
Index management Indexation is anything but ‘passive’
Minimising costs is vital
Index funds are always chasing the index
Dedicated trading research team
Controlling investment and operational risks is essential
Focused on risk at every level
Significant investment in technology
Identifying opportunities to improve returns
Using intelligent trading techniques
Adding value through securities lending
Return
Risk
Cost
Philosophy remains unchanged

28. Minimising costs Smart trading saves you a small fortune
Explicit Costs
Index funds are always chasing the index
Benchmarks assume zero costs
Maximising crossing limits market trades
Size and diversity of global client base
Careful market trading keeps value in your fund
Our global scale keeps costs low
Focused trading research ensures quality execution
Improving portfolio efficiency
Use of new tools and instruments
Implicit Costs

29. Controlling risk No surprises
Investment risk tightly controlled
Closely replicate risk characteristics of index
Stock, industry, country and size segment
Carefully manage risk/cost trade-off
Exceptional standards of operational risk management
All guidelines are stored electronically
Individual managers assigned trade limits
Investment in technology
Development of systems to enhance process

30. Improving returns Helping to re-coup costs
Index Changes – Predictable or Not?
Pro-active approach to index events
Focused research into index changes
Leveraging global knowledge
Developing risk controlled strategies
Improving returns through:
Securities lending
Intelligent trading
Use of new investment tools

31. Indexation is not ‘passive’ investing
-0.2
0.0
0.2
0.4
0.6
US Equities
European
Equities
Japanese
Pacific Rim
Proactive approach to Index changes
Detailed control of risk and value
Coordinated global trading
Announcement
Index Entry
Index Entry
Point
Return
Cost
Risk
9.7
6.2
5.6
4.8
3.9
3.7 1 2 3 4 5 6 7 8 9 10 A B C D E F
Index Weight (%)
Index
BGI Portfolio
Diverse client base  better trading costs
Proprietary trading cost model
Scale  better market trading
Global technology platform
Strict control of operational and investment risk
Multi-faceted risk control structure
Tested investment process

32. Disclaimers Regulatory Information
Barclays Global Investors Limited ('BGIL'), which is authorised and regulated by the Financial Services Authority ('FSA'), has issued this document for access by Professional Clients in the UK only and no other person should rely upon the information contained within it. iShares plc and iShares II plc (together 'the Companies') are open-ended investment companies with variable capital having segregated liability between their funds organised under the laws of Ireland and authorised by the Financial Regulator.
For investors in the UK
Most of the protections provided by the UK regulatory system do not apply to the operation of the Companies, and compensation will not be available under the UK Financial Services Compensation Scheme on its default. The Companies are recognised schemes for the purposes of the Financial Services and Markets Act Important information is contained in the relevant prospectus, the simplified prospectus and other documents, copies of which can be obtained by calling , from your broker or financial adviser, by writing to Barclays Global Investors Limited, iShares Business Development, Murray House, 1 Royal Mint Court, London EC3N 4HH or by writing to the Manager of the Companies: Barclays Global Investors Ireland Limited, New Century House, International Financial Services Centre, Mayor Street Lower, Dublin 1, Ireland.
Restricted Investors
This document is not, and under no circumstances is to be construed as, an advertisement, or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof, where the Companies are not authorised or registered for distribution and where no prospectus for the Companies has been filed with any securities commission or regulatory authority. The Companies may not be acquired or owned by, or acquired with the assets of, an ERISA Plan.
Risk Warnings
Shares in the Companies may or may not be suitable for all investors. Barclays Global Investors Limited does not guarantee the performance of the shares or funds. The price of the investments (which may trade in limited markets) may go up or down and the investor may not get back the amount invested. Your income is not fixed and may fluctuate. Past performance is not a reliable indicator of future results. The value of the investment involving exposure to foreign currencies can be affected by exchange rate movements. We remind you that the levels and bases of, and reliefs from, taxation can change. Affiliated companies of Barclays Global Investors Limited may make markets in the securities mentioned in this document. Further, Barclays Global Investors Limited and/or its affiliated companies and/or their employees from time to time may hold shares or holdings in the underlying shares of, or options on, any security included in this document and may as principal or agent buy or sell securities.

33. Disclaimers Index Disclaimers
'Dow Jones', 'STOXX', 'Dow Jones EURO STOXX Mid Index', 'Dow Jones EURO STOXX Select Dividend 30 Index' and 'Dow Jones EURO STOXX Small Index' are proprietary and copyrighted material and trade marks and/or service marks of Dow Jones & Company, Inc. and/or STOXX Limited and have been licensed for use for certain purposes by Barclays Global Investors Limited. iShares DJ Euro STOXX MidCap, iShares DJ Euro STOXX Select Dividend and iShares DJ Euro STOXX SmallCap are not sponsored, endorsed, sold or promoted by Dow Jones or STOXX, and neither Dow Jones nor STOXX makes any representation regarding the advisability of investing in such funds.
'Dow Jones', 'STOXX', 'Dow Jones EURO STOXX 50 Index' and 'Dow Jones STOXX 50 Index' are proprietary and copyrighted material and trade marks and/or service marks of Dow Jones & Company, Inc. and/or STOXX Limited and have been licensed for use for certain purposes by Barclays Global Investors Limited and iShares II plc. iShares DJ Euro STOXX 50 and iShares DJ STOXX 50 are not sponsored, endorsed, sold or promoted by Dow Jones or STOXX, and neither Dow Jones nor STOXX makes any representation regarding the advisability of investing in such funds.
'FTSE®' is a trade mark jointly owned by the London Stock Exchange plc and the Financial Times Limited (the 'FT'). 'FTSEurofirst®' is a trademark jointly owned by FTSE International Limited ('FTSE') and Euronext N.V ('Euronext'). The FTSEurofirst 100 Index and FTSEurofirst 80 Index are compiled and calculated by or on behalf of FTSE. None of the Exchange, the FT, FTSE or Euronext sponsors, endorses or promotes iShares FTSEurofirst 100 and iShares FTSEurofirst 80 nor is in any way connected to the funds or accepts any liability in relation to their issue, operation and trading. All copyright and database rights within the index values and constituent list vest in FTSE and Euronext. Barclays Global Investors has obtained full licence from FTSE to use such copyright and database rights in the creation of these products.
The FTSE/Xinhua China 25 Index is calculated by or on behalf of FTSE/Xinhua Index Limited ('FXI'). FXI does not sponsor, endorse or promote iShares FTSE/Xinhua China 25. All copyright in the index values and constituent list vests in FXI. Barclays Global Investors has obtained full licence from FXI to use such copyright in the creation of this product. 'FTSE™' is a trade mark jointly owned by the London Stock Exchange plc and the Financial Times Limited. 'Xinhua' is a service mark and trade mark of Xinhua Finance Limited. All marks are licensed for use by FXI.
iShares funds are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or any index on which such funds are based. The Prospectus contains a more detailed description of the limited relationship that MSCI has with Barclays Global Investors and any related funds.
'Standard & Poor’s®', 'S&P®', 'S&P 500' are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Barclays Global Investors, N.A. iShares S&P 500 is not sponsored, endorsed, sold or promoted by S&P and S&P makes no representation regarding the advisability of investing in this product.
'iShares' is a registered trademark of Barclays Global Investors, N.A. All other trademarks, servicemarks or registered trademarks are the property of their respective owners. © 2008 Barclays Global Investors Limited. Registered Company No All rights reserved. Calls may be monitored or recorded.