- The document discusses the history and evolution of ETFs from their origins in the 1990s to their present state and future outlook. - ETFs now offer access to nearly every asset class and have proliferated greatly beyond just broad equity indexes. However, the retail market in Europe remains underdeveloped compared to institutional use. - For ETFs to further expand at the retail level in Europe, greater investor demand, trading volume/liquidity, transparency, and ease of cross-border transactions are needed. Consolidation around the largest providers is also expected.

1. ETFs: Past, Present, and Future Bradley Kay Associate Director, European ETF Research Ben Johnson ETF Strategist, European ETF Research March 25 th , 2010

3. Whence We Came: ETF Market Evolution

5. European ETF Asset Growth by Broad Asset Category Source: Blackrock, Bloomberg

6. Where We Are Now

7. Proliferation of Asset Classes Category/Asset Class # of ETFs Total Net Assets As a % of Total Industry Assets Europe Equity 424 60,526,666,986 42.47 International Equity 243 32,723,777,179 22.96 Fixed Income 153 30,582,153,845 21.46 Traditional Asset Classes 820 £123,832,598,010 84.68 Commodity 291 16,982,675,211 11.92 Other 18 1,476,473,085 1.04 Currency 22 208,379,461 0.15 European ETF Industry Total 1151 £142,500,125,766 100.00 Morningstar Data as of Feb. 2010

14. Innovation, You Say?

19. Where Do We Go From Here