Daily 30-Year Treasury Bull 3x Shares Daily 30-Year Treasury Bear 3x Shares NYSE Arca Current 30-Year U.S. Treasury Index

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1 ETFs to the Power of X Direxion Shares Line-up Bull Funds Bear Funds Index / Benchmark Daily Large Cap Bull 3x Shares Daily Large Cap Bear 3x Shares Russell 1 Daily Small Cap Bull 3x Shares Daily Small Cap Bear 3x Shares Russell 2 Daily Energy Bull 3x Shares Daily Energy Bear 3x Shares Russell 1 Energy Index Daily Financial Bull 3x Shares Daily Financial Bear 3x Shares Russell 1 Financial Service Index Daily Developed Markets Bull 3x Shares Daily Developed Markets Bear 3x Shares MSCI EAFE Index Daily Emerging Markets Bull 3x Shares Daily Emerging Markets Bear 3x Shares MSCI Emerging Market Index Daily Technology Bull 3x Shares Daily Technology Bear 3x Shares Russell 1 Technology Index Daily Mid Cap Bull 3x Shares Daily Mid Cap Bear 3x Shares Russell MidCap Index Daily 1-Year Treasury Bull 3x Shares Daily 1-Year Treasury Bear 3x Shares NYSE Arca Current 1-Year U.S. Treasury Index Daily 3-Year Treasury Bull 3x Shares Daily 3-Year Treasury Bear 3x Shares NYSE Arca Current 3-Year U.S. Treasury Index Direxion Funds Line-up Bull Funds Bear Funds Index/Benchmark Domestic Equity S&P 5 Bull 2.5x Fund S&P 5 Bear 2.5x Fund S&P 5 NASDAQ-1 Bull 2.5x Fund NASDAQ-1 Bear 2.5x Fund NASDAQ-1 Small Cap Bull 2.5x Fund Small Cap Bear 2.5x Fund Russell 2 International Equity Emerging Markets Bull 2x Fund Emerging Markets Bear 2x Fund MSCI Emerging Markets SM Developed Markets Bull 2x Fund Developed Markets Bear 2x Fund MSCI EAFE Latin America Bull 2x Fund S&P Latin America 4 China Bull 2x Fund FTSE/Xinhua China 25 Commodity Commodity Bull 2.5x Fund Morgan Stanley Commodity Related Currency Dollar Bull 2.5x Fund Dollar Bear 2.5x Fund U.S. Dollar Fixed Income 1 Year Note Bull 2.5x Fund 1 Year Note Bear 2.5x Fund 1 Year Treasury Note Alternative Strategy Funds HY Bear Fund Dynamic HY Bond Fund Total Return in Declining High Yield Markets Total Return in High Yield Markets Direxion/Wilshire Dynamic Fund - Financial Trends Strategy Fund S&P Financial Trends Indicator 2 Commodity Trends Strategy Fund S&P Commodity Trends Indicator 3 For Financial Intermediary Use Only Not For Use with Investing Public Leveraged ETF Growth > First leveraged ETF launched in 26 by ProShares > 28 Net cash inflow of +$15 billion (up 126% YOY) > Combined assets of $3 billion (as of 4/3/9) > Proshares (+8% of assets) > Direxion Shares (+1% of assets) > PowerShares/Deutsche Bank (5% of assets) > Rydex (1%) > Average Daily trading volume +$18 billion. Agenda > Composition & Portfolio Management > Implications of Daily Beta Performance > Compounding > Counterparty Exposure > Leveraged ETF Myths > Leveraged ETF s role in Wealth Management Portfolio Management: Composition & Exposure Bull ETFs > 8-1% equities > Replicate Indexes with Limited Constituents > Optimized Indexes with large numbers of securities > Minimize transaction cost > Replicates target index > 2-22% derivatives (swaps or futures) Bear ETFs > 3% derivatives (swaps or futures)

2 Portfolio Management: Rebalancing a Bull Fund Hypothetical Example: Portfolio Management: Rebalancing a Bull Fund Hypothetical Example: Implications of Daily Beta for Performance > When Benchmark Trends in Favorable Direction > (Up for Bull Fund and Down for Bear Fund) > Fund s gains may exceed product of Index Return and Fund Beta Hypothetical Example: *These performance numbers do not reflect daily operating expenses and financing charges, are hypothetical in nature, and are not representative of actual Direxion Shares returns. There is no guarantee the funds will achieve their objective. 7 *These performance numbers do not reflect daily operating expenses and financing charges, are hypothetical in nature, and are not representative of actual Direxion Shares returns. There is no guarantee the funds will achieve their objective. 8 Product of Index Return and Fund Beta Fund Return 9 Implications of Daily Beta for Performance Implications of Daily Beta for Performance Compounding in Trending Markets 15 > When Benchmark Trends in Unfavorable Direction > (Down for Bull Fund and Up for Bear Fund) > Fund s losses may be less than product of Index Return and Fund Beta > Volatile Markets (Now!) > Fund Return will trail product of Index Return and Fund Beta Hypothetical Example: Return% 1 5 Financial Bear 3x Russell LC Financial Index Financial Bull 3x Financial Bear: % Russell Fin Index: -3.42% Hypothetical Example: -5 Financial Bull: -7.19% -1 11/9/28 11/8/28 11/7/28 11/6/28 11/11/28 11/1/28 11/12/28 11/14/28 11/13/28 11/16/28 11/15/28 11/18/28 11/17/28 11/2/28 11/19/28 Symbol Fund 1 Month 3 Month (%) (%) Date YTD (%) 1 Year Since Inception (%) Inception Date As of 12/31/28 Expense Ratio * (Gross/Net %) FAS Financial NAV /6/28.94 /.94 Bull 3x Market Shares /6/28.94 /.94 Close Index Return Fund Return 1 Index Return Fund Return 11 Financial NAV /6/28.94 /.94 FAZ Bear 3x Market Shares /6/28.94 /.94 Close The performance data quoted represents past performance; past performance does not guarantee future results; the investment return and principal value of an investment will fluctuate; an investor's shares, when redeemed, may be worth more or less than their original cost; current performance may be lower or higher than the performance quoted. Returns for performance under one year are cumulative, not annualized. Short term performance, in particular, is not a good indication of the fund's future performance, and an investment should not be made based solely on returns. For additional information, see the fund's prospectus. 12 2

3 Compounding in Volatile Markets Return% 15 Financial Bear 3x Russ LC Financial Index Financial Bull 3x 1 5 Russell Fin Index: -6.32% Financial Bear: -5.1% -5 Financial Bull: -48.8% -1 11/6/28 11/12/28 11/18/28 11/24/28 11/3/28 12/6/28 12/12/28 12/18/28 12/24/28 Date As of 12/31/28 1 Month 3 Month YTD 1 Year Since Inception Expense Ratio * Symbol Fund (%) (%) (%) (%) Inception Date (Gross/Net %) NAV /6/28.94 /.94 Financial FAS Bull 3x Market /6/28.94 /.94 Shares Close NAV /6/28.94 /.94 Financial FAZ Bear 3x Market /6/28.94 /.94 Shares Close 12/3/28 Counterparty Exposure > Is Counterparty Exposure a Risk? > YES > What do you do to mitigate that risk? > Constant credit analysis > Diversification > Tri-party Collateral Management: > Segregated Account held at Custodian for benefit of the CP > Daily Margin Management > Effectively reduces CP exposure to 1 day mark to market risk. Myths about Leveraged ETFs > Myth 1: They Exacerbate Market Volatility, Especially At The Close > Myth 2: Bear Funds Exacerbate Market Declines The performance data quoted represents past performance; past performance does not guarantee future results; the investment return and principal value of an investment will fluctuate; an investor's shares, when redeemed, may be worth more or less than their original cost; current performance may be lower or higher than the performance quoted. Returns for performance under one year are cumulative, not annualized. Short term performance, in particular, is not a good indication of the fund's future performance, and an investment should not be made based solely on returns. For additional information, see the fund's prospectus Myth 1: Exacerbating Market Volatility Volatility has declined substantially since Direxion launch Myth 1: Exacerbating Market Volatility Leveraged ETFs transact at (or near) the Close: Buying on Up Days; Selling on Down Days However: Myth 1: Exacerbating Market Volatility Volatility at the open is actually higher than the close Direxion Shares Launch > Rebalancing trades are highly transparent and are arbitraged > Trades in response to creations and redemptions have no impact at the close because AP is going in opposite direction 9/3/28 8/3/28 7/3/28 6/3/28 5/3/28 4/3/28 3/3/28 2/3/28 1/3/28 5/3/29 4/3/29 3/3/29 2/3/29 1/3/29 12/3/28 11/3/28 1/3/28 Source: NYSE Source: Bloomberg

4 Myth 2: Intensifying Market Declines Myth 2: Intensifying Market Declines Myth 2: Intensifying Market Declines 4,,,. Leveraged ETFs Were Net Long Financials Through the Most Volatile Markets Net Long/Short Short Exposure of All Bear ETFs Is Small Fraction of Total Short Exposure Financial Short Exposure of All Bear ETFs Is Small Fraction of Overall Short Exposure 35,,, 7,,, 3,,,. 3,,, 6,,, 2,,,. 25,,, 5,,, 2,,, Total Short lnterest 1,,,. 15,,, Leveraged Index 4,,, Total Short lnterest - 1,,, 3,,, Leveraged Index (1,,,.) 11/6/28 11/2/28 12/5/28 12/19/28 1/6/29 1/21/29 2/4/29 2/19/29 3/5/29 3/19/29 4/2/29 4/17/29 5/1/29 5/15/29 5,,, 12/31/8 2/27/9 3/31/9 1/31/9 4/3/9 2,,, 1,,, (2,,,.) 12/31/9 1/31/9 2/27/9 3/31/9 4/3/ (3,,,.) Leveraged ETFs Role in Wealth Management Daily Volume as Percent of Outstanding Shares Disclosures > Volatile Trading Environment (NOW) > Short term directional play > Tactical rebalancing > Day Trading > Intra-day hedge. > Benign Volatility: (NOT NOW) > Longer term positions > Hedging > Portable Alpha % 2.% 15.% 1.% 5.%.% BGU BGZ DPK DZK EDC April 29 EDZ ERX ERY FAS FAZ MWJ MWN TNA TYH TYP TZA Average Daily Volume 23 Russell 1 Financial Services Index measures the performance of all financial services related securities in the Russell 1 Index. Indexes are unmanaged and cannot be invested in directly. The Russell Indexes noted herein are trademarks of Russell Investments and have been licensed for use by Direxion Shares. These funds are not sponsored, endorsed, sold or promoted by Russell Investments and Russell Investments makes no representation regarding the advisability of investing in the funds. An investor should consider the investment objectives, risks, charges, and expenses of Direxion Shares carefully before investing. The prospectus contains this and other information about Direxion Shares. To obtain a prospectus, please visit The prospectus should be read carefully before investing. Investing in index funds may be more volatile than investing in broadly diversified funds. The use of leverage by a fund increases the risk to the fund. The more a fund invests in leveraged instruments, the more the leverage will magnify gains or losses on those investments. The risks associated with each fund are detailed in the prospectus. These include adverse market condition risk, adviser's investment strategy risk, aggressive investment techniques risk, concentration risk, counterparty risk, credit and lower-quality debt securities risk, equity securities risk, currency exchange risk, daily correlation risk, daily rebalancing and market volatility risk, depository receipt risk, foreign and emerging markets securities risk, sector securities risk, interest rate risk, inverse correlation risk, leverage risk, market risk, non-diversification risk, shorting risk, small- and mid-cap company risk, tracking error risk, and special risks of exchange-traded funds. Distributor: Foreside Fund Services, LLC. 24 4

5 Direxionshares Direxionshares 275 Washington Street One Newton Place, Suite 31 Newton, MA

6 1 Opportunities in the U.S. fixed income ETF market 2% 4% 2% 4% 22% 16% 3% 15% 5% Aggregate g Corp High-Yield Corp High-Yield Corp Investment Grade Govts TIPS Govt/Corp International Mortgage Muni Sources: BGI, Bloomberg, FactSet, as of 12/31/8. 2 Fixed income correlations Fixed income asset classes have lower historical correlations with each other. This makes the impact of style drift much greater. Total Return Historical Correlations TREASURY CREDIT HIGH YIELD ABS CMBS Treasury 1. Credit.7 1. High Yield (.13) ABS CMBS Fixed income markets are inefficient Equities and ETFs are exchange traded Central execution 2-sided markets supported by a market maker Observable bid/offer spreads Direct measurement of t-costs The fixed income market is an Over The Counter (OTC) market Transactions are done directly between participants No exchange to ensure best execution Lack of transparency into what transaction costs are paid Often large disparities in transaction costs paid by investors Source: Barclays Capital, as of 3/99-3/9. Fixed income sectors as measured by the Barclays Treasury Index, Barclays Credit Index, Barclays High Yield Index, Barclays ABS Index and Barclays CMBS Index, respectively. 3 4 Flexible fixed income? Holding bonds directly creates challenges with: Liquidity Getting bids and offers in volatile markets Trading when you need to trade Access Exposure to high yield, emerging markets, and esoteric asset classes Performing sufficient research on individual credits Scale Getting sufficient diversification, especially for smaller accounts High transaction costs on odd lots Tactical bond allocations can be executed only by the most sophisticated investors 5 The paradox of active fixed income management What is the role of fixed income in a portfolio? Ultimate security of principal Steady income Provide a cushion in falling equity markets Clients want safety Diversification Are these objectives consistent with adding alpha? 6

7 The paradox of active fixed income management Investors need to decide if they want alpha from their fixed income manager Understand that both alpha and downside protection are likely not possible Take a close look at managers look for ability to generate alpha and also protect in down markets There are good active managers the challenge is finding them Index funds offer a lower-cost way of accessing market beta More surety of fund performance in turbulent markets Less downside loss in down markets than average active manager The paradox of active fixed income management The average active manager: Outperforms in stable markets and when spreads narrow Underperforms when credit spreads widen and markets dislocate The right choice depends on an investor s view of the role they want fixed income to play in their portfolio 7 Sources: Barclays and Morningstar, as of 12/31/8. High-Yield Index Excess Return is the excess return of the Barclays Capital U.S. High Yield Index over the Barclays Capital U.S. Aggregate Index. Active manager alpha represents average open-end mutual fund minus benchmark return within the universe of active mutual fund managers benchmarked to the Barclays Capital U.S. Aggregate Index within Morningstar. Past performance does not guarantee future results. 8 The paradox of active fixed income management Overall, many active managers underperformed their benchmarks and over a longer-term horizon nearly all active managers underperformed The paradox of active fixed income management Not only have active managers historically failed to deliver on performance, they have done so with increased risk Source: Morningstar, as of 12/31/8. Taxable managers represent the Morningstar Intermediate Term Bond Category versus the Barclays Capital U.S. Aggregate Index. Past performance does not guarantee future results. 9 Source: Morningstar, as of 12/31/8. Taxable managers represent the Morningstar Intermediate Term Bond Category versus the Barclays Capital U.S. Aggregate Index. Past performance does not guarantee future results. 1 The paradox of active fixed income management Fixed income ishares ETFs Alpha turns negative exactly when an investor needs diversification and stability ishares Bid/Offer S&P 5 Re eturn 6% 5% 4% 3% 2% 1% % -1% -2% -3% -4% -5% % % -2% -4% -6% -8% -1% Manager Al lpha Bid/O Offer Spread (bps) Market Bid/Offer (est.) AGG LQD HYG TIP TLT SHY Barclays Barclays Barclays iboxx $ Investment iboxx $ High Barclays Capital U.S. Capital 1-3 Underlying Capital U.S. Grade Corporate Yield Corporate Capital U.S. 2+ Year Year Treasury Market Aggregate Index Bond Index Bond Index TIPS Index Treasury Index Index 12-Month Rolling S&P 5 Return 12-Month Rolling Manager Alpha ishares Avg. Daily Volume ($M)* Source: BGI. *3-day average as of 2/24/9. Bid/offer data as of 11/3/8. 12

8 ishares modular family of fixed income ETFs TRADING MGMT SYMBOL FEES(%) FIXED INCOME BROAD MARKET BOND FUND ishares Barclays Aggregate AGG.2* TREASURY BOND FUNDS ishares Barclays Short Treasury SHV.15 ishares Barclays 1 3 Year Treasury SHY.15 ishares Barclays 3 7 Year Treasury IEI.15 ishares Barclays 7 1 Year Treasury IEF.15 ishares Barclays 1 2 Year Treasury TLH.15 ishares Barclays 2+ Year Treasury TLT.15 ishares Barclays TIPS TIP.2 MUNICIPAL BOND FUNDS ishares S&P California Municipal CMF.25 ishares S&P National Municipal MUB.25 ishares S&P New York Municipal NYF.25 ishares S&P Short Term National Municipal SUB.25 TRADING MGMT SYMBOL FEES(%) AGENCY BOND FUND ishares Barclays Agency AGZ.2 CREDIT/CORPORATE BOND FUNDS ishares Barclays 1 3 Year Credit CSJ.2 ishares Barclays Intermediate Credit CIU.2 ishares Barclays Credit CFT.2 ishares iboxx $ Investment Grade Corporate LQD.15 ishares iboxx $ High Yield Corporate HYG.5 GOVERNMENT/CREDIT BOND FUNDS ishares Barclays Intermediate Govt./Credit GVI.2 ishares Barclays Government/Credit GBF.2 MORTGAGE-BACKED BOND FUND ishares Barclays MBS MBB.25* INTERNATIONAL FIXED INCOME ishares JPMorgan USD Emerging Markets EMB.6 ishares S&P/Citigroup International Treasury IGOV.35 ishares S&P/Citigroup 1-3 Year Int l Treasury ISHG.35 "Management Fees" are fees paid to Barclays Global Fund Advisors (BGFA), the Fund's investment advisor. A Fund may also incur indirect expenses on its investments, if any, in other investment companies. Please see the Fund's prospectus for more information on such expenses. * The total annual operating expenses are shown for the ishares Barclays Aggregate Bond Fund and ishares Barclays MBS Bond Fund. In addition to the management fees, the total expenses include acquired fund fees and expenses of.4% and.11%, respectively, which are related to the funds' investments in the BGI Prime Money Market Fund (the money market fund ). Acquired fund fees and expenses represent the funds' pro rata share of the fees and expenses charged by the money market fund and may vary based on the funds allocation of assets to the annualized net expenses of the money market fund. Annual operating expenses do not include the effect of interest earned by investments in the money market fund, which is expected to offset the money market fund's fees and expenses. 13 Carefully consider the ishares Funds investment objectives, risk factors and charges and expenses before investing. This and other information can be found in the Funds prospectuses, which may be obtained by calling 1-8-iShares or by visiting Read the prospectus carefully before investing. Investing involves risk, including possible loss of principal. In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Narrowly focused investments typically exhibit higher volatility. Bonds and bond funds will decrease in value as interest rates rise. An investment in the fund(s) is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 14 The information provided is not intended to be a complete analysis of every material fact respecting any strategy and has been presented for educational purposes only. Diversification may not protect against market risk. Asset allocation models do not promise any level of performance or guarantee against loss of principal. Shares of ishares Funds are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Mutual funds and ishares Funds are obliged to distribute portfolio gains to shareholders by year-end. These gains may be generated due to index rebalancing or to meet diversification requirements. Trading shares of the ishares Funds will also generate tax consequences and transaction expenses. Certain traditional mutual funds can be tax efficient as well. When comparing stocks or bonds and ishares Funds, it should be remembered that management fees associated with fund investments, like ishares Funds, are not borne by investors in individual stocks or bonds. The annual management fees of ishares Funds may be substantially less than those of most mutual funds. Buying and selling shares of ishares funds will result in brokerage commissions, but the savings from lower annual fees can help offset these costs. Neither Barclays Global Investors, N.A. and its affiliates nor SEI and its affiliates provide tax advice. Please note that (i) any discussion of U.S. tax matters contained in this communication cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein: and (iii) you should seek advice based on your particular circumstances from an independent tax advisor. Index returns are for illustrative purposes only and do not represent actual ishares Fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. The ishares Funds are not sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., Dow Jones & Company, Inc., European Public Real Estate Association ("EPRA "), FTSE International Limited ("FTSE"), FTSE/Xinhua Index Limited ("FXI"), iboxx, J.P. Morgan Securities Inc., KLD Research & Analytics, Inc., MSCI Inc., Morningstar Inc., The NASDAQ Stock Market, Inc., National Association of Real Estate Investment Trusts ("NAREIT"), New York Stock Exchange, Inc., Frank Russell Company, or Standard & Poor's, nor are they sponsored or endorsed by Barclays Capital. None of these companies make any representation regarding the advisability of investing in the Funds. Neither SEI nor Barclays Global Investors, nor any of their affiliates, are affiliated with the companies listed above except Barclays Capital, which is an affiliate of Barclays Global Investors. FXI does not make any warranty regarding the FTSE/Xinhua Index. All rights in the FTSE/Xinhua Index vest in FXI. Neither FTSE nor NAREIT makes any warranty regarding the FTSE NAREIT Real Estate 5 Index, FTSE NAREIT Residential Index, FTSE NAREIT Retail Index, FTSE NAREIT Mortgage g REITs Index or FTSE NAREIT Industrial/Office Index; all rights vest in NAREIT. Neither FTSE nor NAREIT makes any warranty regarding the FTSE EPRA/NAREIT Global Real Estate ex-us/north America/Europe/Asia, Index; all rights vest in FTSE, NAREIT, and EPRA. All rights in the FTSE Developed Small Cap ex-north America Index vest in FTSE. "FTSE" is a trade- and servicemark of London Stock Exchange and The Financial Times Limited; "Xinhua" is a trade- and servicemark of Xinhua Financial Network Limited. NAREIT is a trademark of NAREIT; EPRA is a trademark of EPRA. The ishares Funds are distributed by SEI Investments Distribution Co. (SEI). Barclays Global Fund Advisors (BGFA) serves as the investment advisor to the Funds. BGFA is a subsidiary of Barclays Global Investors, N.A., a majority-owned subsidiary of Barclays Bank PLC, none of which is affiliated with SEI. 29 Barclays Global Investors. All rights reserved. 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. is Not FDIC Insured No Bank Guarantee May Lose Value For more information, visit Get Started Education Center Product Information Document Library Tools & Charts Track-based learning Watch, listen, get credit Holdings, price and return information Client presentations and materials Portfolio modeling tools and reports 1-8-iShares 17

9 ETF BASICS: AN INTRODUCTION TO ishares EXCHANGE TRADED FUNDS Agenda Growth of ETFs and Barclays Global Investors The engine of ETFs Unique benefits of ETFs and ishares Low cost Tax efficiency Transparency Risk management Liquidity Modularity and strategies 2 Consistent growth of exchange traded funds (ETFs) ETFs experienced rapid growth during bear and bull markets There are 845 U.S. ETFs covering global equity and fixed income with AUM of over U.S. $542 billion U.S. ETF AUM Sources: FRC and Yahoo Finance, as of 12/31/8. Universe includes exchange traded grantor trusts. 1,6 1,4 1,2 1, S&P 5 ishares Others ishares family of funds and mutual fund markets in net new asset flows Fund Family Net Flows ($B) Net Flows ($B) Vanguard State Street Global Advisors ishares DFA Loomis Sayles T. Rowe Price Thornburg Dodge & Cox American Funds Franklin Templeton Fund families serve different market segments. Source: Strategic Insight, as of 12/31/8. Excludes funds of funds and money market funds. Information on American Funds, Vanguard Group, Dodge & Cox, State Street Global Advisors, T. Rowe Price, Dimensional Investment Group, Franklin Templeton Investments, Thornburg and Loomis Sayles is provided strictly for illustrative purposes and should not be deemed an offer to sell or a solicitation of an offer to buy shares of securities, other than the ishares Funds, that are described in this presentation. 3 4 Familiar ground best of both worlds WHAT IS AN ETF? Like a stock Trading flexibility intraday on the exchange Long or short* Options Like an index fund Constructed to track benchmark indexes Low expense ratios Low turnover * With short sales, you risk paying more for a security than you received from its sale. Short sales subject to availability. 6 Draft 1

10 What sets an ETF apart? The creation/redemption process distinguishes ETFs from mutual funds and closed-end funds The creation/redemption process enables the unique benefits of ETFs How traditional mutual funds work Buyers Fund Company Stock Exchange Sellers 7 8 The innovative mechanism of ishares ETFs Investor Buyer Broke rage Account ETF Cash ket Maker/ ed Participant Mark Authorize Two Sourc ces of liquidity On Exchange ETF Liquidity Underlying Portfolio Liquidity Deliver ETF Shares In kind delivery underlying portfolio basket BGI ishares COSTS OF INVESTING INTERNAL FEES AND TAXES The creation/redemption process is the conductor of liquidity between ETFs and their underlying assets Mutual funds and ishares Funds are obliged to distribute portfolio gains to shareholders by year-end. These gains may be generated due to index rebalancing or to meet diversification requirements. Trading shares of the ishares Funds will also generate tax consequences and transaction expenses. Certain traditional mutual funds can be tax efficient as well. 9 Internal expenses matter $1, investment for 1 years 8% annualized return 25 bps 5 bps 1 bps $215,892 gross value ishares Funds low management fees¹ Fund Category bps ishares ETF Large-cap 9 15 Small-cap 2 2 Fixed income International ishares S&P 5 ishares Russell 1 ishares S&P SmallCap 6 ishares Russell 2 ishares Barclays Treasury Series ishares iboxx $ Investment Grade Corporate Bond ishares Barclays Aggregate & TIPS ishares MSCI EAFE ishares MSCI Emerging Markets Internal fees $3,862 Foregone earnings $1,475 $7,625 $2,93 $14,866 $5,778 Sector ishares Dow Jones Sectors ishares S&P Global Sectors Net value $21,556 $25,338 $195,249 ¹ Management Fees are fees paid to Barclays Global Fund Advisors (BGFA), the Fund s investment advisor. A Fund may also incur indirect expenses on its investments, if any, in other investment companies. Please see the Fund s prospectus for more information on such expenses. For illustrative purposes only. Does not include commissions or sales charges. 11 Transactions in shares of the ishares Funds will result in brokerage commissions. 12 Draft 2

11 Tax efficiency of ishares ETFs Index Funds Low turnover Baskets of securities for shares Creation/redemption process Capital gain control Shareholders interact via exchange Taxed as an equity transaction RISK MANAGEMENT ETFs can produce capital gain distributions. For example, during an underlying index reconstitution or corporate actions (especially foreign). 13 ishares ETFs are transparent Manage the unknown know what you own ishares holdings are published daily on ishares.com Pricing of underlying holdings is refreshed continually No style drift Each benchmark represents a defined d market segment Benchmark providers publish methodology Manage risk ishares ETFs are designed to closely track a benchmark ishares funds track ishares Funds 3-Year Average Annual Tracking (as of 12/31/8) Management Fees¹ (as of 1/1/9) S&P 5 -.3%.9% Russell 2.5%.2% Dow Jones U.S. -.16%.2% Dow Jones U.S. Technology -.43%.48% MSCI Japan -.31%.52% MSCI EAFE -.22%.34% Source: BGI. Past tracking performance does not guarantee future performance. 15 ¹ Management Fees are fees paid to Barclays Global Fund Advisors (BGFA), the Fund s investment advisor. A Fund may also incur indirect expenses on its investments, if any, in other investment companies. Please see the Fund s prospectus for more information on such expenses. 16 ishares ETFs provide enhanced liquidity Liquidity of underlying securities provides foundation for ETF liquidity Exchange traded attribute provides additional layers of liquidity LIQUIDITY Market participants compete for client orders, leading to tighter spreads Investors receive price improvement tby transacting ti in the ETF whenever they buy/sell the ETF inside the spread cost of the underlying portfolio basket of securities Trading volume is not indicative of total liquidity in an ETF 18 Draft 3

12 ishares ETF liquidity offers price improvement ishares MSCI Emerging Markets (EEM) ishares Russell 2 (IWM) Annual Shares Trade ed (mlns) 16, 14, 12, 1, 8, 6, 4, 2, $.3 $.25 $.2 $.15 $.1 $.5 Spread ($) Annual Shares Trade ed (mlns) 3, 25, 2, 15, 1, 5, $.5 $.4 $.33 $.2 $.1 Spread ($) ishares MODULAR FAMILY OF FUNDS A SOLUTIONS-DRIVEN APPROACH $ $. Trading Volume Trading Volume ETF Spread ($) ETF Spread ($) Underlying Portfolio Spread ($) Underlying Portfolio Spread ($) Sources: NYSEArca, Stock Facts Pro, 12/8. 19 Modularity and portfolio completion S&P 5 S&P 15 S&P 5 Growth S&P 5 Value U.S. Equity Portfolio Large-cap stocks Modularity and Core/Satellite Russell 3 Russell 1 Russell 1 Growth Russell 1 Value Large-cap growth Portfolio of Active Funds or Managers Large-cap value S&P MidCap 4 S&P MidCap 4 Growth S&P MidCap 4 Value Russell Midcap Russell Midcap Growth Russell Midcap Value S&P SmallCap 6 S&P SmallCap 6 Growth S&P SmallCap 6 Value Russell 2 Russell 2 Growth Russell 2 Value Small-cap growth Small-cap value Modularity and tactical investing Modularity and duration management Utilities Consumer Services Dow Jones U.S. Total Market Basic Materials Barclays Capital 1 3 Year Treasury Consumer Services Consumer Goods Energy Financial Healthcare d Yiel Barclays Capital 7 1 Year Treasury Barclays Capital 2+ Year Treasury iboxx $ Investment Grade Corporate Bond Barclays Capital 1-3 Year Credit Barclays Capital Intermediate Credit Industrial iboxx $ High Yield Corporate Technology Technology Energy Telecom Utilities Duration Draft 4

13 Good for clients. Good for business. Manage costs Manage risks Manage taxes Complementary to your business Portfolio managers and asset managers Wealth managers Consultants and advisors PUTTING ETFs TO WORK SIX ESSENTIAL STRATEGIES Terms of use Before using ishares Funds presentation materials with your clients, please check to ensure that the materials comply with your firm's guidelines. ishares strategies Tax management Opportunistic ideas Fixed income solutions Cash equitization for instant exposure Portfolio completion Core/satellite Version code Version code Tax management TAX MANAGEMENT ishares Funds used to help manage taxes Short Term Tax Strategies Potential uses Lower current year tax liabilities Harvest losses, take gains Bank losses for future use Rebalance to move back to the portfolio s investment objectives Help reduce capital gains payouts Long Term Tax Strategies Potential uses Position portfolios for long term tax efficiency Ensure asset are located as tax efficiently as possible Replace tax-inefficient products with more tax efficient ones Replace underperforming mutual funds with lower-cost index alternatives Version code Version code 29 Mutual funds and ishares Funds are obliged to distribute portfolio gains to shareholders by year-end. These gains may be generated due to index rebalancing or to meet diversification requirements. Trading shares of the ishares Funds will also generate tax consequences and transaction expenses. Certain traditional mutual funds can be tax efficient as well. 3 Draft 5

14 Active manager after-tax performance Ten year period ending 12/31/8 OUTPERFORMANCE CATEGORY BENCHMARK BEFORE TAX AFTER TAX AVERAGE EXPENSE RATIO AVERAGE EXCESS RETURN AVERAGE TAX COST EXCESS RETURN LESS TAX COST Growth of $1, (8% Return Per Annum) Tax cost matters $24, $22, S&P 5 Blend 61.% 43.9% 1.1% 1.7%.94%.13% S&P MidCap 4 Blend 43.9% 27.3% 1.16% -.58% 1.36% -1.94% S&P SmallCap 6 Blend 51.4% 31.4% 1.18%.18% 1.3% -1.12% MSCI EAFE 56.1% 39.% 1.25%.86% 1.13% -.27% MSCI Emerging Markets 54.% 34.% 1.46%.36% 1.15% -.79% $2, $18, $16, $14, $1,555 $2,643 $3,283 $215,893 $25,338 $195,249 $185,69 Barclays Capital U.S Aggregate 7.4%.%.73% -1.3% 1.92% -3.22% $12, Out-of-Pocket Tax Expense Version code Together, fees and taxes represent major contributors to the outperformance challenge faced by active managers. Sources: Morningstar, BGI, 1-year period ending 12/31/8. Data is based on the oldest share class of active open-end mutual funds to avoid double counting of multiple share classes. Funds that were included had at least $5 million in total fund assets to eliminate the impact of small funds. Tax cost calculations are based on a 35% investor tax rate assumption for income and short-term capital gains and a 15% investor tax rate assumption for long-term capital gains. Actual tax costs depend on the investor s tax situation and may differ from those shown. Past performance does not guarantee future results $1,.%.5% 1.% 1.5% Annual Tax Cost Assumption Portfolio Value in Year 1 Tax cost represents the annual amount an investor s return has been reduced due to paying taxes on income and capital gains distributions Source: BGI. For illustrative purposes only. Does not include commissions, sales charges, or fees. Trading shares of the ishares Funds will also generate tax consequences and transaction expenses. Certain traditional mutual funds can be tax efficient as well Tax efficiency of ishares Funds Capital gains distributions history Index funds Low turnover Protection from shareholder activity Shareholders interact via exchange Experienced portfolio management Actively seeks to mitigate capital gains distributions Version code Mutual funds and ishares Funds are obliged to distribute portfolio gains to shareholders by year-end. These gains may be generated due to index rebalancing or to meet diversification requirements. Trading shares of the ishares Funds will also generate tax consequences and transaction expenses. Certain traditional mutual funds can be tax efficient as well. 33 Sources: Morningstar, BGI, period ending 12/8. Past distributions are not indicative of future distributions. Distributions since fund inception shown for ishares Funds with at least one calendar year of performance. 34 Identify tax strategy candidates > Tools & Charts > Portfolio Construction Tools > Correlation Calculator OPPORTUNISTIC IDEAS Sample screenshots from the ishares.com website are for illustrative purposes only Draft 6

15 Opportunistic ideas ishares Funds used to implement ideas across asset classes, sectors, styles and market cap Use to: Overweight or underweight based on technical, fundamental or quantitative research Actively trade around research, earnings, data or sector calls Seek relative outperformance among asset classes or styles, or among industry sectors Biotech Opportunistic idea example: Higher inflation outlook Investment opportunities respond differently to different economic environments Solutions Real assets TIPS Commodity-producing economies (e.g., Australia, Brazil, Canada) Areas to limit Financials Consumer Discretionary International Small Cap ishares ETFs are highly modular ishares ETFs are highly modular 39 4 Index returns chart Show relative performance by market slice as well as by time period Market capitalization Value/growth Region/international Sector/industry Fixed income Specialty/real estate FIXED INCOME SOLUTIONS > Tools & Charts > Performance Charts > Index Returns Chart Sample screenshots from the ishares.com website are for illustrative purposes only. Data as of 1/6/9 and there is no representation that it is current, accurate, or complete, and should not be relied on as such. Index returns are for illustrative purposes only and do not represent actual ishares Fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. For current ishares fund information, including past performance, visit ishares.com or call 1-8-iShares Draft 7

16 Fixed income solutions ishares Funds offer the precision needed to build the foundation of a fixed income strategy Use to Express views on fixed income sectors Implement yield curve and credit spread strategies Build perpetual ladder over time Adjust duration Add potential income/diversify income sources Fixed income portfolio considerations Construction Transaction costs/retail pricing Available inventory Prudent diversification Minimum purchase Ongoing management Aging of portfolio Reinvestment risk and costs Active manager performance review Taxable Fixed Income Excess Performance to 12/8 Morningstar Intermediate Term Bond Category vs. Barclays Capital U.S. Aggregate Index 5th to 25th Percentile 25th Percentile to Median Median to 75th Percentile 75th to 95th Percentile Benefits of ishares Fixed Income ETFs Transparent Exchange Traded Fixed income active managers that outperform index are hard to find Cost and tax efficient No minimums Potential monthly income AMT-free solutions (ishares muni ETFs) Access to difficult to reach fixed income sectors Scalability -25 QTD YTD 1 Year 3 Years 5 Years 1 Years Source: Morningstar and MPI, period ending 12/8. Past performance does not guarantee future results ishares modular TRADING family MGMT of fixed income ETFs TRADING SYMBOL FEES(%) FIXED INCOME BROAD MARKET BOND FUND ishares Barclays Aggregate AGG.24* TREASURY BOND FUNDS ishares Barclays Short Treasury SHV.15 ishares Barclays 1 3 Year Treasury SHY.15 ishares Barclays 3 7 Year Treasury IEI.15 ishares Barclays 7 1 Year Treasury IEF.15 ishares Barclays 1 2 Year Treasury TLH.15 ishares Barclays 2+ Year Treasury TLT.15 ishares Barclays TIPS TIP.2 MUNICIPAL BOND FUNDS ishares S&P California Municipal CMF.25 ishares S&P National Municipal MUB.25 ishares S&P New York Municipal NYF.25 ishares S&P Short Term National Municipal SUB.25 MGMT SYMBOL FEES(%) AGENCY BOND FUND ishares Barclays Agency AGZ.2 CREDIT/CORPORATE BOND FUNDS ishares Barclays 1 3 Year Credit CSJ.2 ishares Barclays Intermediate Credit CIU.2 ishares Barclays Credit CFT.2 ishares iboxx $ Investment Grade Corporate LQD.15 ishares iboxx $ High Yield Corporate HYG.5 GOVERNMENT/CREDIT BOND FUNDS ishares Barclays Intermediate Govt./Credit GVI.2 ishares Barclays Government/Credit GBF.2 MORTGAGE-BACKED BOND FUND ishares Barclays MBS MBB.36* INTERNATIONAL FIXED INCOME ishares JPMorgan USD Emerging Markets EMB.6 ishares S&P/Citigroup International Treasury IGOV.35 ishares S&P/Citigroup 1-3 Year Int l Treasury ISHG.35 "Management Fees" are fees paid to Barclays Global Fund Advisors (BGFA), the Fund's investment advisor. A Fund may also incur indirect expenses on its investments, if any, in other investment companies. Please see the Fund's prospectus for more information on such expenses. * The total annual operating expenses are shown for the ishares Barclays Aggregate Bond Fund and ishares Barclays MBS Bond Fund. In addition to the management fees, the total expenses include acquired fund fees and expenses of.4% and.11%, respectively, which are related to the funds' investments in the BGI Prime Money Market Fund (the money market fund ). Acquired fund fees and expenses represent the funds' pro rata share of the fees and expenses charged by the money market fund and may vary based on the funds allocation of assets to the annualized net expenses of the money market fund. Annual operating expenses do not include the effect of interest earned by investments in the money market fund, which is expected to offset the money market fund's fees and expenses. 47 Fixed Income Investing Fixed Income ETF Traditional Open-End Bond Mutual Fund Pricing Real-time, intraday End of day Net Asset Value Accessibility 1 Any brokerage firm, any account Fund supermarkets, directly from fund company, and select brokers that have arrangements with fund company to sell their funds Individual Bond Subject to availability and broker discretion Most brokers, subject to inventory availability Closed-End Investment Company Real-time, intraday Any brokerage firm, any account Transparency 2 Portfolio of bonds and Portfolio of bonds Prior to trade, Portfolio of bonds intraday prices known required to be reported actual cost of bond required to be reported to investors semi-annually; price not always clear (may semi-annually; intraday known at end of day include prices known to broker mark-up) investors Expense Ratio 3 Low Low to moderate None Wide range Investment comparisons are for illustrative purposes only and not meant to be all-inclusive. There may be significant differences between the investments that are not discussed here. 1 ETFs may be bought or sold on exchange through any brokerage account. However, ETFs may only be redeemed directly from the Fund by Authorized Participants in very large creation/redemption units. 2 The ishares Fixed Income Funds hold a representative sample of their underlying indexes. 3 The annual management fees of ETFs may be substantially less than those of most mutual funds. ETF transactions will result in brokerage commissions, but the savings from lower annual fees can help offset these costs. 48 Draft 8

17 Fixed Income Investing Fixed Income ETF Traditional Open-End Bond Mutual Fund Individual Bond Closed-End Investment Company Fixed Income Portfolio Builder Early Sales/ Redemption Impact 1 Commission on sale of shares Early Sales/redemption fee may be charged by some fund companies Fee charged to liquidate bond; impact of call feature Commission on sale of shares Diversification 2 Portfolio of bonds, broad industry and maturity representation across objective Varies-bond index mutual funds are likely to be more diversified than actively managed bond funds For ladders, limited diversification from different maturity holdings. For individual bonds, no diversification Portfolio of bonds, broad industry and maturity representation across objective Hedging Yes; Regulation T margin rules apply 3 No Subject to availability and broker discretion Yes; Regulation T margin rules apply 3 Liquidity Open-end fund structure and real-time, intraday prices Open-end fund structure and end-of-day Net Asset Value Depends on bond, available prices, mark-ups/downs Closed-end structure limits initial supply of shares; real-time, intraday prices Investment comparisons are for illustrative purposes only and not meant to be all-inclusive. There may be significant differences between the investments that are not discussed here. 1 ETFs may be bought or sold on exchange through any brokerage account. However, ETFs may only be redeemed directly from the Fund by Authorized Participants in very large creation/redemption units. 2 The ishares Fixed Income Funds hold a representative sample of their underlying indexes. 3 There are special risks associated with margin investing. As with stocks, you may be called upon to deposit additional cash or securities if your account equity, including that which is attributable to ETFs, declines. > Tools & Charts > Portfolio Construction Tools > Fixed Income Portfolio Builder Sample screenshot from the ishares.com website is for illustrative purposes only Cash equitization ishares Funds used to achieve immediate and focused market exposure CASH EQUITIZATION FOR INSTANT EXPOSURE Use to Immediately invest the cash portfolio of a new client Express conviction on opportunity for a sector, rather than an individual name Replace fund during manager transition Search by fund category Search by fund characteristics > ishares Fund Finder > ishares Fund Screener Draft 9

18 Portfolio completion ishares Funds used to diversify an incomplete portfolio PORTFOLIO COMPLETION Use to Meet prudent standards that dictate broad diversification Supplement portfolio managers who specialize in one or several asset classes Avoid availability, expense or capacity issues that are present in separate account or mutual fund alternatives Invest allocation that falls short of separate account minimum Portfolio summary: client s balanced portfolio Evaluating the impact of portfolio completion Example 12 B Benchmark return (%) Average annual 8 4 B I I Initial Portfolio Large-Cap Equity Fixed Income > Tools & Charts > Portfolio Construction Tools > Correlation Calculator Sample screenshot from the ishares.com website is for illustrative purposes only. 57 Risk (%) annualized standard deviation > Tools & Charts > Portfolio Construction Tools > Asset Class Illustrator 58 Complete asset allocation with ishares ETFs Example Large-Cap International ti ishares fund Small-Cap ishares fund Fixed Income Real Estate ishares fund Mid-Cap Value ishares fund Initial Portfolio ishares Funds 59 Illustrate complete portfolio Example return (%) Average annual P Risk (%) annualized standard deviation B I B Benchmark I Initial Portfolio Large-Cap Equity Fixed Income > Tools & Charts > Portfolio Construction Tools > Asset Class Illustrator P Complete Portfolio Large-Cap Equity Fixed Income International ishares fund Small-Cap ishares fund Mid-Cap Value ishares fund Real Estate ishares fund 6 Draft 1

19 Core/satellite portfolio construction ishares Funds combined with active investments to manage trade-off between active risk and active return CORE/SATELLIT E Use to Alter active risk/return characteristics of the portfolio Address client sensitivity to benchmark underperformance Balance cyclical l active manager performance Why use core/satellite? Active performance = Active risk Active Manager Performance Versus the Russell 1 Value Index 2 15 Total Average Returns 5 Years 1 Years Russell 1 Value -.79% 1.36% 1% Active -.27% 3.38% Establish asset allocation using benchmarks 1 Hire funds or managers to attempt to outperform the benchmark Active risk is introduced to the portfolio Use Core/satellite to reduce active risk of high tracking error investments on the asset allocation while leaving room for potential outperformance eturns % Re Source: Morningstar, BGI. Data as of 12/31/8. Active manager returns represent the performance of the median top quartile Large Cap Value manager. For illustrative purposes only. Not indicative of any fund, manager or investment. Index returns are for illustrative purposes only and do not represent actual ishares Fund performance. Index performance returns do not reflect any management fee, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. For actual ishares Fund performance, please visit or request a prospectus by calling 1-8-iShares. 64 Risk Dial: 1% Active Manager Total Average Returns Russell 1 Value 1% Active Risk Dial: 5/5 Active/Index Blend Total Average Returns Russell 1 Value 1% Active 5/5 Blend 5 Years -.79% -.27% 5 Years -.79% -.27% -.52% Manager return min nus index return (%) Years 1.36% Annualized Tracking Error 3.38% 2.8% Russell 1 Value Manager return min nus index return (%) Years 1.36% Annualized Tracking Error 3.38% 2.8% 2.38% 1.4% Russell 1 Value Source: Morningstar, BGI. Data as of 12/31/8. Active manager returns represent the performance of the median top quartile Large Cap Value manager. For illustration only. Not indicative of any fund, manager or investment. Index returns are for illustrative purposes only and do not represent actual ishares Fund performance. Index performance returns do not reflect any management fee, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. For actual ishares Fund performance, please visit or request a prospectus by calling 1-8-iShares. 65 Source: Morningstar, BGI. Data as of 12/31/8. Active manager returns represent the performance of the median top quartile Large Cap Value manager. For illustration only. Not indicative of any fund, manager or investment. Index returns are for illustrative purposes only and do not represent actual ishares Fund performance. Index performance returns do not reflect any management fee, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. For actual ishares Fund performance, please visit or request a prospectus by calling 1-8-iShares. 66 Draft 11

20 Index and Active Investments of California the Three Public Employees Largest Retirement System Public California Pension State Teachers Plans (CalPERS), US$ bln (CalSTRS), US$ bln Manage active risk Total Plan 31% $214 Total Plan 32% $147 Domestic Equity 62% $64 Domestic Equity 69% $55 International Equity 59% $45 International Equity 39% $23 Domestic Bonds Domestic % $38 % $29 Bonds New York State Common, US$ bln Total Plan 48% $138 Domestic 76% $52 Equity % of asset class allocated to index investments % of asset class allocated to active investments International 14% $2 Equity Domestic 66% $36 Bonds > Tools & Charts > Portfolio Construction Tools > Core-Satellite Portfolio Builder Sample Screenshot from the ishares.com website is for illustrative purposes only. Source: Pensions & Investments, 1/26/ ishares ETFs and Mutual Funds: Know the Differences ishares ETFs Shares are not individually redeemed from the fund Transactions in shares of ishares ETFs result in brokerage commissions and generate tax consequences ishares ETFs seek to track a market index, before fees and expenses Mutual Funds Hold baskets of securities Obliged to distribute portfolio gains to shareholders exchanges intraday directly Trade on at market Accessed from the fund price company or through a select broker and pricing occurs once a day Investors buy or redeem shares at the end-of-day net asset value, less any applicable fees Some mutual funds may charge sales loads or redemption fees Most mutual funds are actively managed, seeking to outperform market indexes Carefully consider the ishares Funds investment objectives, risk factors and charges and expenses before investing. This and other information can be found in the Funds prospectuses, which may be obtained by calling 1-8-iShares or by visiting Read the prospectus carefully before investing. Investing involves risk, including possible loss of principal. Bonds and bond funds will decrease in value as interest rates rise. An investment in the fund(s) is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency The information provided is not intended to be a complete analysis of every material fact respecting any strategy and has been presented for educational purposes only. Asset allocation models and diversification do not promise any level of performance or guarantee against loss of principal. Shares of ishares Funds are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Mutual funds and ishares Funds are obliged to distribute portfolio gains to shareholders by year-end. These gains may be generated due to index rebalancing or to meet diversification requirements. Trading shares of the ishares Funds will also generate tax consequences and transaction expenses. Certain traditional mutual funds can be tax efficient as well. When comparing stocks or bonds and ishares Funds, it should be remembered that management fees associated with fund investments, like ishares Funds, are not borne by investors in individual stocks or bonds. The annual management fees of ishares Funds may be substantially less than those of most mutual funds. Buying and selling shares of ishares Funds will result in brokerage commissions, but the savings from lower annual fees can help offset these costs. Neither Barclays Global Investors, N.A. and its affiliates, nor SEI and its affiliates, provide tax advice. Please note that (i) any discussion of U.S. tax matters contained in this communication cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein; and (iii) you should seek advice based on your particular circumstances from an independent tax advisor. Index returns are for illustrative purposes only and do not represent actual ishares Fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. Sample screenshots from the ishares.com web site are for illustrative purposes only. Data on any sample screenshot is as of 2/28/9 and there is no representation that it is current, accurate or complete, and should not be relied on as such. Neither is the data representative of any investment. For current ishares Fund information, including fund performance, visit or call 1-8-iShares. 71 The ishares Funds are not sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., Dow Jones & Company, Inc., European Public Real Estate Association ( EPRA ), FTSE International Limited ( FTSE ), FTSE/Xinhua Index Limited ( FXI ), iboxx, J.P. Morgan Securities Inc., KLD Research & Analytics, Inc., MSCI Inc., Morningstar Inc., The NASDAQ Stock Market, Inc., National Association of Real Estate Investment Trusts ( NAREIT ), New York Stock Exchange, Inc., Frank Russell Company, or Standard & Poor s, nor are they sponsored or endorsed by Barclays Capital. None of these companies make any representation regarding the advisability of investing in the Funds. Neither SEI nor BGI, nor any of their affiliates, are affiliated with the companies listed above except Barclays Capital, which is an affiliate of Barclays Global Investors. FXI does not make any warranty regarding the FTSE/Xinhua Index. All rights in the FTSE/Xinhua Index vest in FXI. Neither FTSE nor NAREIT makes any warranty regarding the FTSE NAREIT Real Estate 5/Residential/Retail/Mortgage g REITsor Industrial/Office Index; allrights vest in NAREIT. Neither FTSE nor NAREIT makes any warranty regarding the FTSE EPRA/NAREIT Global Real Estate ex-us/north America/Europe/Asia Index; all rights vest in FTSE, NAREIT, and EPRA. All rights in the FTSE Developed Small Cap ex-north America Index vest in FTSE. "FTSE" is a trade- and servicemark of London Stock Exchange and The Financial Times Limited; "Xinhua" is a trade- and servicemark of Xinhua Financial Network Limited. NAREIT is a trademark of NAREIT; EPRA is a trademark of EPRA. The ishares Funds are distributed by SEI Investments Distribution Co. (SEI). Barclays Global Fund Advisors (BGFA) serves as the investment advisor to the Funds. BGFA is a subsidiary of Barclays Global Investors, N.A., neither of which is affiliated with SEI. 29 Barclays Global Investors. All rights reserved. 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. is Not FDIC Insured No Bank Guarantee May Lose Value 72 Draft 12