State of the Nation for Exchange Traded Funds (ETFs)

Trevor CummingsVice President

2

Growth of Exchange-Traded Funds Worldwide

0

200

400

600

800

1000

1200

1400

1600

1800

2000

220019

93

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Q1

2011

ETF Assets Total ($M) 0.8 1 2 5 8 18 40 74 105 142 212 310 412 566 797 710 1,032 1,311

ETF Commodity AssetsETF Fixed Income AssetsETF Equity Assets

# of ETFs

Growth of Exchange-Traded Funds Worldwide

Source: ETF Landscape, Industry Highlights, Q1 2011, BlackRock Canada.

3

U.S. Exchange Traded Products - Assets Under Management

U.S. Exchange Traded Products - Assets Under Management

45%

27%

17%

10% 1%

Domestic Equity

International Equity

Fixed Income

Commodities

Currency

Source: BlackRock Asset Management Canada Limited. Data as of 31 August 2010

4

Canada ETFs - Assets Under Management

Canada ETFs - Assets Under Management

61%11%

22%

4%0%

Domestic Equity

International Equity

Fixed Income

Commodities

Balanced

Source: BlackRock Asset Management Canada Limited. Data as of 29 April 2011

5

Net Inflows into Canadian ETFs

YTD Net Inflows into Canadian ETFs

Source: BlackRock Asset Management Canada Limited. Data as of 29 April 2011.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

Balanced Domestic Equity Commodities Fixed Income InternationalEquity

Pe

rce

nta

ge

Why Have Investors Embraced ETFs?

Portfolio Applications

7

The Unique Value in Total Portfolio Management

Value is a process of evaluation and implementation based on the relationship between return and risk, executed in a cost- and tax-efficient manner

Cost

RiskReturn

Taxes

CLIENT PORTFOLIO

8

Investment Needs and Familiarity with ETFs

31

47

16

16

64

45

40

22

19

13

20

15

36

20

47

34

71

64

21

19

40

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

$750k+

$500k-$750k

65+

51-64

35-50

Under 35

Total

Very familiar Somewhat familiar Not very familiar

“How familiar are you with exchange traded funds or ETFs? Please tell us using a

scale of one to nine where one means not at all familiar and nine means very familiar.”

Source: The Gandalf Group

9

Key Findings About ETFs Relative to Mutual Funds

Investors familiar with ETFs are very positive about them

However, few investors in this group hold ETFs

Awareness is low among those aged 50+

Only 27% say their advisor has recommended an ETF

ETFs are seen to provide advantages over mutual funds of:

• Transparency

• Rate of return

• Preservation of capital

• Management fees

9

Source: The Gandalf Group

10

ETFs Mutual Funds

Hold baskets of securities

Obliged to distribute portfolio gains to shareholders

Trade on exchanges intraday at market price, which may be greater or less than Net Asset Value (NAV)

Shares are not individually redeemed from the fund

Transactions in shares of ETFs result in brokerage commissions and generate tax consequences

ETFs generally seek to track a market index, before fees and expenses

Accessed directly from the fund company or through a select broker and pricing generally 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

ETFs and mutual funds: various differences

11

How To Take Advantage of ETFs Immediately?

• Fixed Income

• Active/Passive Mix

• Tactical Rotation Strategy

Fixed Income

13

Dispersion of Fixed Income Asset Class Performance

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

9.4% 15.3% 13.3% 17.5% 15.2% 5.9% 4.4% 9.0% 18.9% 12.5%

9.3% 11.1% 11.2% 10.3% 13.8% 4.4% 4.1% 8.6% 16.3% 11.4%

8.1% 8.8% 9.1% 10.2% 6.6% 4.1% 3.7% 6.4% 14.5% 11.1%

7.7% 8.7% 8.5% 7.3% 6.5% 4.1% 3.4% 2.7% 5.5% 7.3%

6.1% 8.6% 6.7% 7.1% 6.0% 4.0% 2.5% 0.4% 5.4% 6.7%

0.5% 7.0% 6.0% 7.1% 5.1% 3.9% 1.8% 0.2% 4.5% 6.5%

N/A 6.3% 5.1% 5.1% 2.4% -2.9% 1.6% -0.9% 1.6% 3.6%

Dispersion of performance represents opportunity to manage risk, to enhance returns or income

Source: PC-Bond, a business unit of TSX Inc. 12/31/10.

Short Term Universe Long Term HYBrid

Corporate Government Real Return

14

Use the building blocks to exploit the opportunities

Over the past 5 years, sector returns within the index hover around 5.5%

The dispersion over shorter periods offers the opportunity to achieve higher returns

ETF Index Total Returns (%)

Source: PC-Bond, a business unit of TSX Inc. Data for month ending 29 April 2011.

-2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%

Government

Real Return

Universe

Short

Long

Corporate

Hybrid

YTD 1 YR 5 YR

15

Duration Management

Alter the duration of a portfolio: • Efficiently adjust risk to reflect your market view – increase to reflect bullish fixed income

market sentiment or reduce to implement defensive position• Portfolio of several iShares ETFs with different duration

Du

rati

on

Increasing DurationDecreasing Duration

10

9

8

7

6

5

4

3

2

1

0

Core Bond Portfolio

iShares DEX Short Term Bond Index Fund (XSB)

iShares DEX Long Term Index Fund (XLB)

Adjust duration exposure to manage interest rate risk

16

iShares DEX All Corporate Bond Index Fund

Fixed Income ETFs Offer Price Improvement

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2007 2008 2009 2010

Mo

nth

ly S

har

es T

rad

ed (

tho

usa

nd

s)

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

Sp

read

(%

)

Monthly Volume ETF Closing Spread

Source: Bloomberg, BlackRock Asset Management Canada Limited . As of 31-May-2010.

17

Using iShares Fixed Income ETFs as Building Blocks

Modular family of fixed income ETFs enable investors to express views on:

• Credit

• Yield

• Duration

Components of various DEX Indexes

Relationship Between Yield, Duration and Credit Risk

Source: PC-Bond, a business unit of TSX Inc. Data as of 5 May 2011.

0

1

2

3

4

5

6

0 2 4 6 8 10 12 14 16 18

Weighted Average Duration (Yrs)

We

igh

ted

Av

era

ge

Yie

ld t

o

Ma

turi

ty (

%)

Government

Long

HYBrid

Real Return

Short

UniverseCorporate

18

Opportunities in the Canadian Fixed Income ETF Market

Total Canadian-listed Fixed Income ETFs: $9.0 billion

Investors are embracing fixed income ETFs in record numbers

Source: Bloomberg, BlackRock. As of 29 April 2011.

32%

18%

7%

0%

7%

2%

22%

0%

12%

Corporate

Total Market

Government

US Credit

Emerging Markets Credit

Real Return

Long Term Broad

Short Term Broad

US Treasuries

Active & Passive

20

Core/Satellite Approach:Blending Index and Active Investments

• Lower overall costs

• Access an institutional investment process

• Implement tactical calls

• Refine rebalancing opportunities

Index Investments Active Investments

Canadian Small-cap

Emerging Markets

U.S. Equities

International Fixed Income

Canadian Large Cap

21

Creating a smoother ride: hypothetical active manager performance

-8

-6

-4

-2

0

2

4

6

8

10

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Year

Qu

art

erl

y A

cti

ve

Re

turn

(%

)

60% active/40% index

100% Active

Creating a smoother ride: hypothetical active manager performance

Source: BlackRock Asset Management Canada Limited.For illustrative purposes only; not meant to represent any specific investment. This chart shows under- and outperformance relative to a benchmark. Performance may have been positive or negative during any period.

Tactical Rotation Strategy

23

iShares Sector Breakdown

iShares Sector Breakdown (as of 31 March 2011)

Source: BlackRock Asset Management Canada Limited.

0

5

10

15

20

25

30

35M

ate

ria

ls

Co

nsu

me

rD

iscr

etio

na

ry

Co

nsu

me

r S

tap

les

Fin

an

cia

ls

He

alth

Ca

re

Ind

ust

ria

ls

En

erg

y

Info

rma

tion

Te

chn

olo

gy

Te

leco

mm

un

ica

tion

Se

rvic

es Util

itie

s

Per

cen

tag

e (%

)

iShares S&P/TSX Capped Composite Index Fund (XIC)

iShares MSCI EAFE Index Fund (EFA)

iShares MSCI Emerging Markets Index Fund (EEM)

24

S&P Global Healthcare Sector Index: Country Breakdown

S&P Global Healthcare Index – Country Breakdown

(as of 31 March 2011)

Source: BlackRock Asset Management Canada Limited.

United States

Switzerland

United Kingdom

France

Japan

Germany

Denmark

Australia

Canada

Belgium

Ireland

25

S&P Global Healthcare Sector Index - Top Companies

S&P Global Healthcare Sector Index - Top Companies (%)

(as of 31 March 2011)

Source: BlackRock Asset Management Canada Limited.

7.6

7.6

6.7

4.8

4.7

4.6

3.6

3.63.03.0

48.1

Pfizer Inc

Johnson & Johnson

Novartis AG-Reg

Merck & Co Inc.

Roche Holding AG - Genusschein

GlaxoSmithKline PLC

Sanofi-Aventis

Abbott Laboratories

Bayer AG

AstraZeneca PLC

Other

26

Sector Perspectives

Outlook

Global Sector Positive Neutral Negative

Consumer Discretionary

Consumer Staples

Energy

Financials

Healthcare

Industrials

Information Technology

Materials

Telecoms

Utilities

iShares Sector Perspectives – April 2011

27

THANK YOU

For more information, visitwww.iShares.ca

1-866-486-4874

28

This presentation is intended for accredited investors in Canada only.

iShares® Funds are managed by BlackRock Asset Management Canada Limited. Commissions, management fees and expenses all may be associated with investing in iShares Funds. Please read the relevant prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or operational charges or income taxes payable by any securityholder that would have reduced returns. The funds are not guaranteed, their values change frequently and past performance may not be repeated. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional.

DEX Universe Bond Index™, DEX All Corporate Bond Index™, DEX All Government Bond Index™, DEX HYBrid Bond IndexTM, DEX Long Term Bond Index™, DEX Real Return Bond Index™, and DEX Short Term Bond Index™ are trademarks of TSX Inc. and have been licensed for use for certain purposes to BlackRock Asset Management Canada Limited by PC-Bond, a business unit of TSX Inc. XBB, XCB, XGB, XHB, XLB, XRB and XSB are not sponsored, endorsed, sold or promoted by PC-Bond, TSX Inc., its affiliates or third party data providers and they make no representation, warranty, or condition regarding the advisability of investing in the funds.

MSCI® and EAFE® are trademarks of MSCI, Inc. (“MSCI”). XBZ, XEM, XIN and XWD are permitted to use the MSCI mark and, as applicable, the EAFE mark pursuant to a license agreement between MSCI and BlackRock Institutional Trust Company, N.A., relating to, among other things, the license granted to BlackRock Institutional Trust Company, N.A. to use the indices. BlackRock Institutional Trust Company, N.A. has sublicensed the use of these trademarks to BlackRock Asset Management Canada Limited. XBZ, XEM, XIN and XWD are not sponsored, endorsed, sold or promoted by MSCI and MSCI makes no representation, condition or warranty regarding the advisability of investing in XBZ, XEM, XIN and XWD.

© 2011 BlackRock Asset Management Canada Limited. All rights reserved. iShares® is registered trademark of BlackRock Institutional Trust Company, N.A. Used under license. BlackRock® is a registered trademark of BlackRock, Inc. Used with permission. All other trademarks, service marks or registered trademarks are the property of their respective owners.