October 11, 2005 PRESENTATION TO THE 1818 SOCIETY The World Bank

Road Map Introduction Funded Status Asset Allocation Market Environment Plan Performance

Assets versus Liabilities, * n Assets grew by $1.0 billion during CY04 n Assets exceeded the actuarial PBO and ABO liabilities at the end CY04 Note: The actuarial present value of plan liabilities is determined on the basis of actuarial assumptions and are discounted currently at a 3.5% real rate

Plan Funded Status Note: The funded ratio is the ratio of the market value of assets to the actuarial present value of plan liabilities.

SRP Participants

n Bank contribution rates increased from 25.62% of net salaries in FY05 to 26.72% for FY06. Annual Contributions and Payments

Total Plan  Public Equities  Fixed Income  Alternatives Strategic Asset Allocation Policy (%) Decision Date Dec. 98 Dec. 00 Jul. 01 Apr. 02 Jun n No changes were made to the Strategic Asset Allocation in 2004 and 2005.

Market Environment Equities  Global Equity markets posted strong returns in 2004, with most of the run up in Q4

Market Environment 2004 – Fixed Income  Fixed Income markets also performed well, supported by a benign interest rate environment despite the start of the tightening cycle

Market Environment 2004 – Alternatives  Alternative markets (Hedge Funds, Private Equity and Real Estate) good market for private equity realizations; strong capital flows into real estate continued to push valuations upward

Plan Performance (2004)  U.S. Equity  Non-U.S. Equity  Fixed Income  Hedge Funds  Private Equity  Real Estate  Currency Overlay* Excess Return Policy Return Plan Return Total Plan  In 2004, SRP assets posted a return of 11.0%, outperforming its policy portfolio by 1.1%, with a majority of asset classes outperforming their benchmarks. *Currency Overlay program is for hedging the net currency exposure for the Plan

Plan Performance (Jan ’05 – Aug ‘05)  U.S. Equity  Non-U.S. Equity  Fixed Income  Hedge Funds  Private Equity*  Real Estate* Excess Return Policy Return Plan Return Total Plan *PE and RE are preliminary **Currency Overlay program is for hedging the net currency exposure for the Plan  Absolute returns have come down in 2005  Markets can change quickly, as witnessed in the last quarter of 2004 Sept 04 YTD Plan Dec 04 Plan

Source: State Street Gross Returns (period ending December 31, 2004) Plan Performance

Source: State Street Gross Returns (periods ending December 31, 2004) Plan Performance

Plan Volatility (Periods ending June ‘05)  U.S. Equity  Non-U.S. Equity  Fixed Income  Hedge Funds  Private Equity  Real Estate Year 5 Year 1 Year Total Plan  Volatility of returns has fallen in most asset classes in recent years  Lower volatility is accompanied by less differentiation in returns among securities, making it more difficult for active managers to outperform

Return to Risk Ratio (Through June ‘05)  U.S. Equity  Non-U.S. Equity  Fixed Income  Hedge Funds  Private Equity  Real Estate Year 5 Year 1 Year Total Plan  Highest risk adjusted return in many years

Concluding Remarks  Funded status of the plan continued to improve during 2004  Market outsmarted doomsayers in 2004 – not useful to market-time  Low return/low volatility environment: beware of distortions  Implications for institutional investors:  Diversify  Look for illiquidity/intransparency premium  Focus on long term trends