1. By Mark Roberts, Head of iShares Product Strategy BARCLAYS GLOBAL INVESTORS Insider’s Guide to Exchange Traded Funds (ETFs) Younger Members Convention

2.  What are Exchange Traded Funds (ETFs)  History of ETFs and iShares  Global ETF market overview  Benefits of ETFs  Practical applications  Comparisons to other funds  Costs & Spreads  Mechanics of ETFs  Liquidity CONTENTS

3. EXCHANGE TRADED FUNDS (ETFs) Index tracking funds that are listed and traded intraday on a stock exchange Allows investors to buy or sell an entire market index in one trade – like a share Bought and sold through any broker Structured and registered for sale to the public in respective jurisdictions Mutual Fund, VCC, Sicav, etc Not a derivative or SPV

4.  Standard & Poors Depositary Receipts™ (SPY)  TIPS/HIPS (Canada)  MidCap SPDR™  WEBS (World Equity Benchmark Shares)  Diamonds™ (DJIA)  Sector SPDRs™  BGI makes strategic commitment to ETFs  QQQ (NASDAQ-100 Index Tracking Stock™)  iShares Launch in US and UK  WEBS re-branded  Merrill Lynch – LDRS™ launch in Europe 1993 1995 1996 1997 1998 1999 2000 HISTORY of ETFs and iShares

5.  Barclays Global Investors – iShares™  BoNY – QQQ (NASDAQ-100 Index Tracking Stock™)  Merrill Lynch – LDRS™  HVB – Ind EX Change™  SocGen/Lyxor – MasterShare™  AXA – EasyETFs™  UBS – Fresco Index Shares™  SSgA – StreetTracks ® & SPDRs  Nikko, Nomura, Daiwa - Japan SPONSORS of ETFs

6. 0 20 40 60 80 100 120 140 19931995199719992001 Total Global ETF AUM (30-Sept-2002) € Bil  Since launch in 1993, ETFs have grown to >270 funds with >340 listings, trading in 17 countries with >€130 Bil in assets  ETF assets more than doubled ever year through 2000 and continue to see growth in bear market  Growth through 3Q 2003 is 11% globally, 37% in Europe GLOBAL ETF MARKET OVERVIEW

7. BENEFITS of ETFs Intraday Trading – buy and sell anytime the market is open Diversification - reduces single stock risk Low cost – low internal management fees Benchmark performance – reduces active risk Transparent – daily disclosure of holdings Liquid – access underlying stocks Simple – trade and settle like ordinary share Dividends paid – index yield minus fund expenses

8. CURRENT USERS of ETFs Asset managers Insurance companies Private banks Hedge funds Retail investors Unit trust managers Proprietary trading desks Arbitrageurs Fund of fund managers

9. PRACTICAL APPLICATIONS Access to Global Markets Hedging Tax Loss Harvesting Equitizing Cash Transition Tool Alternative to Futures Core / Satellite Strategies Buy-and-hold Long Positions Sector Rotation Long / Short Strategies – Pair Trades

10. COMPARISONS TO OTHER FUNDS Closed-End FundsOpen-End FundsExchange Traded Funds (UK Investment Trusts)(UK Unit Trusts)(iShares) Often trade at discount orNo premium or discountSlight premium premium to NAVor discount* Accessible from anyAccessible by directAccessible from any brokerage accounttransactions with the Fundbrokerage account Company or distributors Traded and pricedTraded and pricedTraded and priced throughout exchangeonly at end of day NAVthroughout trading day Can sell short if allowedNo short sellingCan sell short if allowed by local jurisdiction by local jurisdiction * Although BGI believes that market makers will take advantage of differences between the NAV and the trading price of iShares through arbitrage opportunities, BGI cannot guarantee that they will do so.

11. COSTS Total expense ratio of fund (0.35% to 0.55%) Bid/offer spread Brokerage commission ETFs do not charge loads, trailers, or similar

12. BID/OFFER SPREADS Factors will include: Spreads/liquidity on underlying shares in basket Cost of hedging for market makers Market demand for ETF On exchange or OTC Transaction costs – (e.g. stamp tax) In general: Spreads on ETFs should be close to spreads on buying underlying basket in cash market

13. ETF MECHANICS INVESTORS (Buyer) iShares Market Makers CAPITAL MARKETS BROKERAGE EXCHANGE iShares Fund iShares plc Cash iShares Cash Securities Basket of Securities iShares

14. WHY do ETFs TRADE CLOSE to NAV? Open-end structure Arbitrage opportunities for market makers should the trading price of an ETF deviate too far away from value of underlying basket of stocks

15. ETF LIQUIDITY An Important Take-Away For ETFs: Trading Volume Liquidity ETF liquidity is derived from the liquidity of the underlying securities and is not constrained by volume on exchange =

16. DISCLOSURES Regulatory information Barclays Global Investors Limited, regulated by the FSA, has issued this document for access in the United Kingdom (UK). iShares is not regulated by the FSA: it is authorised by the Central Bank of Ireland. Most of the protections provided by the UK regulatory system do not apply to its operation, and compensation will not be available under the UK Investors Compensation Scheme on its default. iShares plc (“iShares”) is an investment company with variable capital incorporated in Ireland. iShares plc is a recognized scheme for the purposes of the Financial Services and Markets Act 2000. Any subscription to any iShares fund is made on the basis of the fund prospectus, which is available by calling iShares on 0845 357 7000. Restricted Investors Various iShares funds have been authorised in the UK, France and The Netherlands. Accordingly, such shares are not to be marketed in any other jurisdiction. For further details please see the Prospectus of iShares plc. Specifically this document is not aimed at persons who are resident in the United States, where the Company is not authorised or registered for distribution. Shares may not except pursuant to a relevant exemption, be acquired or owned by, or acquired with the assets of, an ERISA Plan. iShares have not been, nor will they be, qualified for distribution to the public in Canada as no prospectus for iShares has been filed with any securities commission or regulatory authority in Canada or any province or territory thereof. This document is not, and under no circumstances is to be construed, as an advertisement or any other step in furtherance of a public offering of Shares in Canada. No person resident in Canada for the purposes of the Income Tax Act (Canada) may purchase or accept a transfer of iShares unless he or she is eligible to do so under applicable Canadian or provincial laws. Risk warnings iShares may not be suitable for all investors. Barclays Global Investors Limited does not guarantee the performance of iShares. The price of the investments (which may trade in limited markets) may go up or down and the investor may not get back the amount invested. Past performance will not necessarily be repeated. The value of an investment involving exposure to foreign currencies can be affected by exchange rate movements. We remind you that the levels and bases of and reliefs from taxation may change. You are buying shares in a company that will be listed on a stock exchange. The price of the shares will be determined by supply and demand. It is not necessarily the same as the value per share of iShares plc’s assets. At any time the share price may be at a discount or premium to the asset value. However, because of the exchange traded fund structure, it is expected that a significant discount or premium of price to asset value will not be sustainable over the long term. Any projections or examples (including calculations used therein) are for illustrative purposes only and are not guaranteed to be accurate or complete. Important information about iShares is contained in the Key Features document, copies of which can be obtained by calling iShares on 0845 357 7000, or from your broker or financial adviser. This presentation does not constitute an offer to purchase shares in any iShares funds. “iShares” is a trademark owned by Barclays Global Investors Limited. © August 2002 Barclays Global Investors Limited All rights reserved