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

2. Road Map Introduction Funded Status Asset Allocation Market Environment Plan Performance

3. Assets versus Liabilities, 1994-2004 * 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

4. Plan Funded Status 1994 - 2004 Note: The funded ratio is the ratio of the market value of assets to the actuarial present value of plan liabilities.

5. SRP Participants

6. n Bank contribution rates increased from 25.62% of net salaries in FY05 to 26.72% for FY06. Annual Contributions and Payments 1994-2004

7. Total Plan  Public Equities  Fixed Income  Alternatives 100.0 35.0 40.0 25.0 Strategic Asset Allocation 100.0 40.0 20.0 Policy (%) Decision Date Dec. 98 Dec. 00 Jul. 01 Apr. 02 Jun. 03 100.0 55.0 25.0 20.0 100.0 70.0 20.0 10.0 100.0 60.0 20.0 n No changes were made to the Strategic Asset Allocation in 2004 and 2005.

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

9. 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

10. 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

11. Plan Performance (2004)  U.S. Equity 12.512.0 0.5  Non-U.S. Equity 19.121.1-2.0  Fixed Income 5.6 4.8 0.8  Hedge Funds 8.9 4.0 4.9  Private Equity 21.714.2 7.5  Real Estate 20.017.4 2.6  Currency Overlay* -3.5 -3.8 0.3 Excess Return Policy Return Plan Return 11.0 9.9 1.1 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

12. Plan Performance (Jan ’05 – Aug ‘05)  U.S. Equity 3.7 3.1 0.6 2.0 12.5  Non-U.S. Equity 7.1 6.5 0.6 4.4 19.1  Fixed Income 4.1 4.1 0.0 3.2 5.6  Hedge Funds 4.6 1.6 3.1 4.4 8.9  Private Equity*4.1 2.9 1.2 6.0 21.7  Real Estate* 4.5 4.5 0.0 8.6 20.0 Excess Return Policy Return Plan Return 5.4 4.7 0.7 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 3.7 11.0

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

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

15. Plan Volatility (Periods ending June ‘05)  U.S. Equity 9.015.715.3  Non-U.S. Equity 10.715.7 15.1  Fixed Income 1.6 2.9 3.3  Hedge Funds 2.6 3.516.9  Private Equity10.311.014.4  Real Estate 8.1 6.9 9.9 10 Year 5 Year 1 Year 4.2 8.5 9.4 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

16. Return to Risk Ratio (Through June ‘05)  U.S. Equity 1.0 0.0 0.6  Non-U.S. Equity 1.5 0.1 0.5  Fixed Income 5.3 2.5 2.5  Hedge Funds 3.2 2.0 0.6  Private Equity 1.9 1.1 1.2  Real Estate 2.2 1.7 1.2 10 Year 5 Year 1 Year 2.7 0.3 0.9 Total Plan  Highest risk adjusted return in many years

17. 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