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Barclays Capital ResearchBest Investable Ideas

Global Research in action

BARCLAYS CAPITAL FUND SOLUTIONS March 2011

For institutional and professional investors only. For information only. Not for further distribution or distribution to retail investorsThis document contains limited information about the strategy. Further details are available on request.

For institutional and professional investors only. For information only. Not for further distribution or distribution to retail investors

2

Contents

• Macro Overview

• Research Best Ideas

• Stimulus by US, UK and EU Central Banks

• Underestimation of corporate earnings and cash

• Expectation of growth in corporate CAPEX

• Overblown fears of UK re-entering recession

• European Dividend Futures pricing in excessively negative view

• RADAR Overview

• RADAR fund positioning and performance

• Questions?

• Important Information

Macro Overview

4For institutional and professional investors only. For information only.

Not for further distribution or distribution to retail investors

Macro Overview

Barclays Capital Research - Tactical Asset Allocation Team - global investment views

Risky assets rally is set to continue over the next quarter, LSAP (Long-term Strategic Asset Purchase) is likely to benefit equities over other asset classes in the coming months

Credit should continue to outperform sovereign debt although absolute returns are likely to be limited

We favour developed market equities, both US and European stocks, in particular, cyclical sectors that can benefit from reflationary pressures

Stay long industrials and technology in the US, basic resources and mining stocks in Europe

The outlook for emerging market assets remains strong. However, volatility may remain high given the potential for geo-political and monetary tightening fears

Prefer to gain exposure to emerging markets via export-oriented corporates in developed markets

European dividend futures remain cheap – still discounting double digit drop in earnings over the next two years

Source: Barclays Capital Research, Asset Allocation, “Equities are Back”, December 2010 and Global Outlook, December 2010

Research Best Ideas



Stimulus by US, UK and EU Central Banks

Don’t fight the reflation trade

The economic recovery is on track and growth is surprising on the upside

Equities in particular expected to outperform

Governments bonds expected to be under pressure

However, the reflation trade may not last long, and investors should position for continued volatility and the possibility of sharp reversals

Better growth, combined with easy and easier monetary policy, provides a very favourable backdrop for risky assets

RADAR

Equity long exposure of around 70% across US, EU

and Asian markets

0% in G10 Government Bonds

Source: Barclays Capital Research, Global Outlook, December 2010



Underestimate of corporate earnings and cash

Improving outlook for companies

In the US, earnings likely to rise sharply, supported by accommodation monetary policy

Margins improving to exceed previous peaks in consumer discretionary and technology sectors

Mild inflation is positive for equities, especially food retail, basic resources and chemicals

However, US valuations no longer look attractive, suggesting it is increasingly difficult to justify extending overweight positioning

European equities benefiting from low valuation levels and improving profitability

RADAR

US S&P position of 15%

European Equities position of 29%




Expectation of growth in corporate CAPEX

Technology and business services likely to benefit

High and improving levels of free cash give rise to strong balance sheets

Corporates selectively positioning for stronger growth going forward

IT hardware and software upgrade/replacement cycle playing “catch up” after downturn

However, softening of economic outlook or hardening of Fed policy are clear triggers for pull back in corporate CAPEX

Labour costs are still relatively depressed and labour market is easy

RADAR

US Technology Stocks position of 9.2%

US Industrials Stocks positions of 9.4%




Overblown fears of UK re-entering recession

Polarised views driving mixed markets

Q4 2010 GBP number -0.5% gave rise to double-dip fears

Credit should continue to outperform sovereign debt although absolute returns are likely to be limited

UK MPC continues to follow accommodative policy despite rising inflation

However, should workers start to argue for wage increases and inflation become embedded, higher rates have the potential to derail the recovery story

Initial economic activity numbers for Jan 11 supportive of strengthening recovery

RADAR

Interest Rate swap relative value trade:

payer UK 5yr, receiver US 5yr




European Dividend Futures pricing in excessively negative view

Rain in Spain, but equities can gain

Valuations remain low in both absolute and relative terms

Corporate reform of the last 10 years is bearing fruit in productivity

Labour costs remain subdued

However, turbulence in the peripheral states continues to add to volatility

The European Stock Market does NOT equal the Euro Area Economy

RADAR

Long position in European Divided Futures of 5.0%


RADAR Fund Positioning and Performance



RADAR Fund Positioning

Portfolio Positioning as of 31st January 2011

Strategy Portfolio Allocation – 31 January 2011

0%2%4%6%8%

10%12%14%16%18%20%

Euro

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GBP

USD

IRS

DA

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Euro

STO

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ivid

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US

Larg

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Bas

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S&P

500

Inde

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US

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uity

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US

Indu

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ock

Equi

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KO

SPI 2

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Credit Fixed Income European Equities US Equities Asian Equities

Strategy Portfolio Allocation – 31 January 2011

0%2%4%6%8%

10%12%14%16%18%20%

Euro

pean

Cre

dit Bo

nds

5y5y

GBP

USD

IRS

DA

X F

utur

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Euro

STO

XX 5

0 Fu

ture

s

Hig

h D

ivid

end

Equi

ty B

aske

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Met

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and

Min

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Equi

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US

Larg

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Bas

ket

S&P

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US

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US

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Credit Fixed Income European Equities US Equities Asian Equities

Source: Barclays CapitalAs of 31st January 2011RADAR asset allocations are subject to change



Changing asset allocations over time

Optimised portfolio asset allocations over time – dynamic portfolio management in action

(40%)

0%

40%

80%

120%

160%

200%

Mar

-200

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-200

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-200

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Jul-2

009

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2010

Feb

-201

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-201

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-201

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010

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-201

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-201

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-201

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Dec

-201

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Jan-

2011

Commodities Equities Fixed Income FX

Note: Chart shows allocation data for the RADAR Strategy from March 2009 to 31January 2011. These allocations exclude cash positions.The Strategy was launched in March 2009. Source: Barclays Capital as of 31 January 2011RADAR asset allocations are subject to change



RADAR: Performance Analysis in Feb 2011

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31/0

1/20

11

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RADAR (GBP)

FTSE 100 Index

Risk management is carried out on a daily basis. The RADAR fund dramatically reduced its equity exposure half way through the month, taking profits and protecting the downside, as equities sold off on the back of the turmoil in the Middle East.

Source: Barclays Capital as of 28 February 2011. Fund performance calculated as total return net of fees in GBP.Note: The inclusion in this graph of performance for the FTSE 100 Index is for illustrative purposes only. The strategy has no single benchmark. Past performance is no indication of future performance.

RADAR and FTSE 100 Index throughout February 2011



RADAR Performance

80

100

120

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180

Mar-0

9

May

-09

Jul-0

9

Sep-

09

Nov-0

9

Jan-1

0

Mar-1

0

May

-10

Jul-1

0

Sep-

10

Nov-1

0

Jan-1

1

RADAR (GBP)

FTSE 100 Index TR

FTSE Actuaries Govt Securities UK GiltsTR

RADAR vs UK Equity and Bond market since inception*

KEY PERFORMANCE INDICATORS

RETURN 1M (%) RETURN 3M (%) RETURN 12M (%)ANNUALISED RETURN SINCE INCEPTION**(%)

ANNUALISED VOLATILITY SINCE INCEPTION** (%)

RADAR 3.34% 8.55% 10.16% 20.00% 13.54%

FTSE 100 2.64% 9.02% 15.51% 28.35% 18.35%

FTSE Actuaries Govt Securities UK Gilts

0.71% -1.31% 5.59% 2.61% 6.33%

*Using month end data from 31st March 2009 to February 28th 2011**Using daily data from 23rd March 2009 to February 28th 2011Source: Barclays Capital as of 28 February 2011. Fund performance calculated as total return net of fees in GBP.Note: The inclusion in this graph of performance for the FTSE 100 Index and FTSE Actuaries Govt Securities UK Gilts Index is for illustrative purposes only. The strategy has no single benchmark. Past performance is no indication of future performance.


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RADAR – Strategy Overview

• Positive absolute returns with below-equity volatility

• Multi-asset global macro strategy

• Highest conviction investment ideas from one of the best

research houses in UCITS III fund form

• Good track record in delivering positive absolute returns

• Benefits from Barcap Research expertise in economic and

market analysis, and tactical asset allocation

• Benefits from BCFS expertise in cross-asset fund

management, downside risk control and trade execution

• Rigorous investment process and strict governance

• Focuses on liquid securities

• Barcap Research acts in an advisory role

• BCFS has fiduciary responsibility for all funds under

management; manages the strategy on a day-to-day basis;

makes investment decisions

Cash, equities, bonds futures, liquid OTCs (1)

Multi-Asset

VaR constrained leverage

Global Macro

Global

Daily

Key Facts

01 March 2009

*Over The Counter instruments comprise mainly interest rate swaps** Source: Citywire – Newcits Global Macro Universe as at 31 January 2011

Regional Coverage

Instruments Used

Liquidity

Diversification

Market Exposure

Classification

Strategy Launch Date

Positive absolute returns in all market environments

Target

Performance

TargetPerformance

Return

RADAR targets positive absolute returns in all market conditions by leveraging the key recommendations from Barclays Capital Research

Historical volatility 10-12% per annum

Key Features

**Quartile Rank

2nd Over 1 Month1st Over 3 Months2nd Over 1Year2nd Over 18 Months



Questions?



RADAR – Q1 2011 Conference Call – 8th April 2011

RADAR QUARTERLY INVESTOR CALL

Friday 8th April 2011, 09:30 – 10.15 London time United Kingdom Dial in: +44 (0)203 134 4555

Password: BCFS RADAR

An update on the RADAR fund and research’s outlook


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Risk Factors

THESE RISK FACTORS HIGHLIGHT ONLY SOME OF THE RISKS OF THE STRATEGIES DESCRIBED IN THIS DOCUMENT (EACH, A “STRATEGY”).

Barclays’ rating is not a recommendation as to Barclays’ creditworthiness or the risks, returns or suitability of Strategy.

THIS STRATEGY MAY BE VOLATILE. The level of change in value of a Strategy is its “volatility”. The Strategy’s volatility may be affected by performance of the underlying assets, along with financial, political and economic events and other market conditions.

TAX MAY APPLY. Payments from the Strategy may be subject to tax, withholding and other deductions.

THIS STRATEGY COMBINES INVESTMENT TYPES. Different types of financial risk may interact unpredictably, particularly in times of market stress.

THIS DOCUMENT CANNOT DISCLOSE ALL POSSIBLE RISKS OF THE Strategy. Before investing, you must satisfy yourself that you fully understand the risks of investment.

Before investing, you should read the investment guidelines. The manager’s fees are paid from assets under management and will reduce the return on the Strategy.

All opinions and estimates are given as of the date hereof and are subject to change.

This Strategy is collateralised to the extent required to ensure compliance with applicable laws and regulations. However if a counterparty does not post collateral to the Strategy as and when required, the Strategy may terminate the transaction(s) with such counterparty and the Strategy may suffer significant losses as a result.

Furthermore, since the Strategy bears counterparty’s credit risk, if a counterparty becomes insolvent the Strategy may not be able to meet all its payment obligations.


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Important Information

This document is an indicative summary. It has been prepared by Barclays. It is subject to change. This document is for information purposes only and is not binding. We are not offering to sell or seeking offers to buy any Strategy. Any transaction requires our subsequent formal agreement which will be subject to internal approvals and binding transaction documents.

Obtain independent professional advice before investing. We are not recommending or making any representations as to suitability of any Strategy. Counterparties (which may include, without limitation, Barclays), their affiliates and associated personnel may act in several capacities in financial instruments which may adversely affect the Strategy’s performance.

Any past performance or simulated past performance contained herein is no indication as to future performance. No representation is made as to the reasonableness of the assumptions made within or the accuracy or completeness of any pricing information, performance data or modelling in these materials.

We are not responsible for information stated to be obtained or derived from third party sources or statistical services. No part of this document may be reproduced, distributed or transmitted without Barclays’ written permission. Barclays may disclose any information relating to your investment which is required by regulators. Barclays will not be liable for any use you make of any information in this document.

Barclays Capital is the investment banking division of Barclays Bank PLC. Barclays Bank PLC is authorised and regulated by the UK Financial Services Authority and a member of the London Stock Exchange. Barclays Bank PLC is registered in England No. 1026167. Registered Office: 1 Churchill Place, London E14 5HP.

Copyright Barclays Bank PLC, 2011 (all rights reserved).

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