ISHARES TRUST, 485APOS, 2000-11-22

ISHARES TRUST
485APOS, 2000-11-22

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<PAGE>

As filed with the Securities and Exchange Commission on November 22, 2000

File Nos. 333-92935 and 811-09729

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 7 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 7 [X]

(Check appropriate box or boxes)

iShares Trust
-------------

(Exact Name of Registrant as Specified in Charter)

c/o Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
----------------

(Address of Principal Executive Office)(Zip Code)

Registrant's Telephone Number, including Area Code: (415) 597-2000

The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
(Name and Address of Agent for Service)

With Copies to:
W. JOHN MCGUIRE, ESQ. RICHARD MORRIS, ESQ.
MORGAN, LEWIS & BOCKIUS LLP BARCLAYS GLOBAL INVESTORS; N.A.
1800 M STREET, N.W. 45 FREMONT STREET
WASHINGTON, DC 20036 SAN FRANCISCO, CA 94105

It is proposed that this filing will become effective (check appropriate box):

[_] Immediately upon filing pursuant to [_] On (date) pursuant to paragraph
paragraph (b) (b)
[_] 60 days after filing pursuant to [_] On (date) pursuant to paragraph
paragraph (a)(1) (a)(1)
[X] 75 days after filing pursuant to [_] On (date) pursuant to paragraph
paragraph (a)(2) (a)(2) of Rule 485
If appropriate, check the following box:

[_] The post-effective amendment designates a new effective date for a
previously filed post-effective amendment
<PAGE>

iShares(SM)
iShares Trust

The iShares Trust consists of 49 separate investment portfolios called "funds".
Each fund seeks investment results that correspond generally to the price and
yield performance, before fees and expenses, of a particular equity market
index. Barclays Global Fund Advisors is the advisor to each fund. This
prospectus relates to the following new funds (each a "Fund" and collectively
the "Funds"):

iShares Goldman Sachs Consumer Industries Index Fund

iShares Goldman Sachs Cyclical Industries Index Fund

iShares Goldman Sachs Financials Index Fund

iShares Goldman Sachs Healthcare Index Fund

iShares Goldman Sachs Natural Resources Index Fund

iShares Goldman Sachs Technology Index Fund

iShares Goldman Sachs Utilities Index Fund

iShares Russell Midcap Index Fund

iShares Russell Midcap Growth Index Fund

iShares Russell Midcap Value Index Fund

The shares of each Fund, called "iShares", are listed for trading on a national
securities exchange (a "Listing Exchange"). iShares will trade on a Listing
Exchange at market prices throughout the trading day. Market prices for iShares
may be different from their net asset value ("NAV"). Each fund has its own Cusip
number and exchange trading symbol.

Each Fund issues and redeems iShares at NAV only in large blocks of 50,000
iShares or multiples thereof. These "Creation Unit" transactions are usually in
exchange for a basket of stocks and an amount of cash. As a practical matter,
only institutions or large investors purchase or redeem Creation Units.

Except when aggregated in Creation Units, iShares are not redeemable securities.

The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.

Prospectus _______________, 2000
<PAGE>

Table of Contents

<TABLE>
<CAPTION>
<S> <C> <C>
Details on Investing Overview.............................................................. 1
in iShares

Introduction......................................................... 1
Investment Objective................................................. 1
Principal Investment Strategies...................................... 1
Replication.......................................................... 2
Representative Sampling.............................................. 2
Correlation.......................................................... 2
Industry Concentration Policy........................................ 2
Details on the Risks of Principal Risk Factors Common to All Funds........................... 2
Investing in iShares
Market Risk.......................................................... 2
Asset Class Risk..................................................... 2
Passive Investments.................................................. 3
Tracking Error Risk.................................................. 3
Lack of Governmental Insurance or Guarantee.......................... 3
Concentration........................................................ 3
Derivatives.......................................................... 3
Market Trading Risks................................................. 3
Absence of Prior Active Market................................. 3
Lack of Market Liquidity....................................... 3
iShares May Trade at Prices Other than NAV..................... 3

Details on Each Description of iShares Goldman Sachs
iShares Fund Index Funds...................................................

iShares Goldman Sachs Consumer Industries Index Fund.................
iShares Goldman Sachs Cyclical Industries Index Fund.................
iShares Goldman Sachs Financials Index Fund..........................
iShares Goldman Sachs Healthcare Index Fund..........................
iShares Goldman Sachs Natural Resources Index Fund...................
iShares Goldman Sachs Technology Index Fund..........................
iShares Goldman Sachs Utilities Index Fund...........................

Description of iShares Russell
Index Funds...................................................

iShares Russell Midcap Index Fund....................................
iShares Russell Midcap Growth Index Fund.............................
iShares Russell Midcap Value Index Fund..............................

Details on Management Management............................................................
and Operations

Investment Advisor...................................................
Administrator, Custodian, Transfer Agent and Securities
Lending Agent.................................................
</TABLE>

i
<PAGE>

<TABLE>
<S> <C>
Details on Buying and Shareholder Information...............................................
Selling iShares.

Buying and Selling iShares...........................................
Book Entry...........................................................
iShare Prices........................................................
Determining NAV......................................................
Dividends and Distributions..........................................
Taxes................................................................
Taxes on Distributions...............................................
Taxes when iShares are Sold on the [Listing Exchange]................
Creations and Redemptions............................................
iShares Index Funds Transaction Fees.................................

Distribution.........................................................

Index Providers......................................................
</TABLE>

ii
<PAGE>

Overview

Introduction

This Prospectus provides the information you need to make an informed decision
about investing in iShares of each Fund. It contains important facts about the
iShares Trust as a whole and each Fund, in particular.

An index is a group of stocks that an index provider selects as representative
of a market, market segment or specific industry sector. The index provider
determines the relative weightings of the stocks in the index and publishes
information regarding the market value of the index.

Each Fund is an "index fund" which seeks investment results that correspond
generally to the price and yield performance, before fees and expenses, of a
particular index (its "Underlying Index"). Barclays Global Fund Advisors
("BGFA"), the advisor to each Fund, is a subsidiary of Barclays Global
Investors, N.A. ("BGI"). BGFA and its affiliates are not affiliated with any of
the Index Providers:

Goldman, Sachs & Co. is a leading global investment banking and securities
firm, providing a full range of investing, advisory and financing services
worldwide to a substantial and diversified client base.

Frank Russell Company is an investment services firm that offers a variety
of investment management products and services.

The Principal Investment Strategies and the Principal Risk Factors Common to All
Funds sections discuss the principal strategies and risks applicable to the
Funds, while the Description of iShares Funds sections provide important
information about each Fund, including a brief description of its Underlying
Index and principal risks specific to that Fund.

Investment Objective

Each Fund seeks investment results that correspond generally to the price and
yield performance, before fees and expenses, of its Underlying Index.

Principal Investment Strategies

BGFA uses a "passive" or indexing approach to try to achieve each Fund's
investment objective. Unlike many investment companies, the Funds do not try to
"beat" the markets they track and do not seek temporary defensive positions when
markets decline or appear overvalued. BGFA does not make any judgments about the
investment merit of a particular stock, nor does it attempt to apply any
economic, financial or market analysis.

Indexing may eliminate some of the risks of active management, such as poor
stock selection. Indexing may also help increase after-tax performance by
keeping portfolio turnover low in comparison to actively managed investment
companies.

Each Fund will invest at least 90% of its total assets in the stocks of its
Underlying Index. A Fund may hold up to 10% of its total assets in stocks not
included in its Underlying Index. For example, BGFA may invest in stocks not
included in the relevant Underlying Index in order to reflect various corporate
actions (such as mergers) and other changes in the relevant Underlying Index
(such as reconstitutions, additions and deletions). As long as a Fund invests at
least 90% of its total assets in the stocks of its Underlying Index, it may also
invest its other assets in futures contracts, options on futures contracts,
options, and swaps related to its Underlying Index, as well as cash and cash
equivalents.

BGFA uses two basic indexing strategies -- Replication and Representative
Sampling -- as described below. The Description of iShares Funds sections
indicate the strategy of each Fund.

Replication

"Replication" is investing in substantially all of the stocks in the relevant
Underlying Index in approximately the same proportions as in the Underlying
Index.

1
<PAGE>

Representative Sampling

"Representative Sampling" is investing in a representative sample of stocks in
the Underlying Index, which have a similar investment profile as the Underlying
Index. Stocks selected have aggregate investment characteristics (based on
market capitalization and industry weightings), fundamental characteristics
(such as return variability, earnings valuation and yield) and liquidity
measures similar to those of the relevant Underlying Index. Funds that use
Representative Sampling generally do not hold all of the stocks that are
included in the relevant Underlying Index.

Correlation

An index is a theoretical financial calculation while a Fund is an actual
investment portfolio. The performance of a Fund and its Underlying Index will
vary somewhat due to transaction costs, market impact, corporate actions (such
as mergers and spin-offs) and timing variances.

BGFA expects that, over time, the correlation between each Fund's performance
and that of its Underlying Index, before fees and expenses, will be 95% or
better. A figure of 100% would indicate perfect correlation. Any correlation of
less than 100% is called "tracking error". A Fund using Representative Sampling
can be expected to have a greater tracking error than a Fund using Replication.

Industry Concentration Policy

No Fund will concentrate its investments (i.e. hold 25% or more of its total
assets in the stocks of a particular industry or group of industries), except
that a Fund will concentrate to approximately the same extent that its
Underlying Index concentrates in the stocks of such particular industry or group
of industries. For purposes of this limitation, securities of the U.S.
Government (including its agencies and instrumentalities), repurchase agreements
collateralized by U.S. Government securities, and securities of state or
municipal governments and their political subdivisions are not considered to be
issued by members of any industry.

Principal Risk Factors Common to all Funds

Each Fund is subject to the principal risks described below. Additional
principal risks associated with a Fund are discussed under the description of
such Fund. Some or all of these risks may adversely affect a Fund's net asset
value ("NAV"), trading price, yield, total return and/or its ability to meet its
objectives.

Market Risk

Each Fund's NAV will react to securities markets movements. You could lose money
over short periods due to fluctuation in a Fund's NAV in response to market
movements, and over longer periods during market downturns.

Asset Class Risk

The returns from the types of securities in which a Fund invests may
underperform returns from the various general securities markets or different
asset classes. Different types of securities tend to go through cycles of out-
performance and underperformance in comparison to the general securities
markets.

Passive Investments

The Funds are not actively managed. Each Fund may be affected by a general
decline in the U.S. or foreign market segments relating to its Underlying Index.
Each Fund invests in the securities included in its Underlying Index regardless
of their investment merit. BGFA does not attempt to individually select stocks
or to take defensive positions in declining markets.

Tracking Error Risk

Factors such as the fees and expenses of a Fund, imperfect correlation between a
Fund's stocks and those in its Underlying Index, rounding of share prices,
changes to the Underlying Indices and regulatory policies may affect BGFA's
ability to achieve close correlation with the Underlying Index of each Fund.
Each Fund's returns may therefore deviate from those of its Underlying Index.

2
<PAGE>

Lack of Governmental Insurance or Guarantee

An investment in the Funds is not a bank deposit nor is it insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.

Concentration

If the Underlying Index of a Fund concentrates in a particular industry or group
of industries, that Fund may be adversely affected by the performance of those
stocks and be subject to price volatility. In addition, a Fund that concentrates
in a single industry or group of industries may be more susceptible to any
single economic, market, political or regulatory occurrence.

Derivatives

A derivative is a financial contract the value of which depends on, or is
derived from, the value of an underlying asset such as a security or an index.
Each Fund may invest in stock index future contracts and other derivatives.
Compared to conventional securities, derivatives can be more sensitive to
changes in interest rates or to sudden fluctuations in market prices and thus a
Fund's losses may be greater if it invests in derivatives than if it invests
only in conventional securities.

Market Trading Risks

Absence of Prior Active Market

Although the iShares described in this Prospectus are listed for trading on
a Listing Exchange, such as the American Stock Exchange LLC ("AMEX"), New
York Stock Exchange, Inc. ("NYSE"), or Chicago Board Options Exchange
("CBOE"), there can be no assurance that an active trading market for
iShares will develop or be maintained.

Lack of Market Liquidity

Trading in iShares may be halted because of market conditions or for
reasons that, in the view of the Listing Exchange, make trading in iShares
inadvisable. In addition, trading in iShares is subject to trading halts
caused by extraordinary market volatility pursuant to "circuit breaker"
rules. There can be no assurance that the requirements necessary to
maintain the listing of the iShares of any Fund will continue to be met or
will remain unchanged.

iShares May Trade at Prices Other than NAV

iShares may trade below, at, or above their NAV. The NAV of iShares will
fluctuate with changes in the market value of a Fund's holdings. The
trading prices of iShares will fluctuate in accordance with changes in
their NAVs as well as market supply and demand. However, given that iShares
can be created and redeemed only in Creation Units at NAV (unlike shares of
many closed-end funds, which frequently trade at appreciable discounts
from, and sometimes at premiums to, their NAVs), BGFA believes that large
discounts or premiums to the NAVs of iShares should not be sustained.

Additional principal risks associated with investing in iShares of a
particular Fund are discussed in the Description of iShares Funds sections.

3
<PAGE>

Description of iShares Funds

iShares Goldman Sachs Index Funds

. iShares Goldman Sachs Consumer Industries Index Fund

. iShares Goldman Sachs Cyclical Industries Index Fund

. iShares Goldman Sachs Financials Index Fund

. iShares Goldman Sachs Healthcare Index Fund

. iShares Goldman Sachs Natural Resources Index Fund

. iShares Goldman Sachs Technology Index Fund

. iShares Goldman Sachs Utilities Index Fund

Goldman Sachs, Goldman Sachs Consumer Industries Index, Goldman Sachs Cyclical
Industries Index, Goldman Sachs Financials Index, Goldman Sachs Healthcare
Index, Goldman Sachs Natural Resources Index, Goldman Sachs Technology Index
and, Goldman Sachs Utilities Index are servicemarks of

4
<PAGE>

Goldman, Sachs & Co. ("Goldman Sachs") and have been licensed for use for
certain purposes by BGI. The Funds that are based on Goldman Sachs indices are
not sponsored, endorsed, sold or promoted by Goldman Sachs, and Goldman Sachs
makes no representations regarding the advisability of investing in iShares.

5
<PAGE>

iShares Goldman Sachs Consumer

Industries Index Fund

Cusip: _____________
[Listing Exchange] Trading Symbol: ______________
Underlying Index: Goldman Sachs Consumer Industries Sector Index
----------------------------------------------------------------

Investment Objective

The iShares Goldman Sachs Consumer Industries Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield performance,
before fees and expenses, of the Goldman Sachs Consumer Industries Sector Index
(the "Index").

Principal Investment Strategy

The Goldman Sachs Consumer Sector Index has been developed by Goldman Sachs as
an equity benchmark for U.S.-traded consumer-related stocks. The Index includes
companies in the following categories: producers/retailers of food and
beverages, drug retailers, providers of entertainment and leisure facilities,
lodging, accommodations, restaurants and pubs, and providers of business
services. The Fund uses a Representative Sampling strategy to try to track the
Index.

As of September 29, 2000, the Index consisted of 289 stocks. Its three largest
stocks were Wal Mart Stores Inc., Coca Cola Co. and Home Depot Inc. (which
comprised 6.37%, 5.77% and 5.19% respectively, of its market capitalization).
The Fund will concentrate its investments in a particular industry or group of
industries to approximately the same extent the Index is so concentrated. As of
September 29, 2000, the Index was concentrated in _______________, which
comprised ____% of its market capitalization (based on the composition of the
Index).

Principal Risks Specific to the Fund

. The success of consumer product manufacturers and retailers is tied closely to
the performance of the domestic and international economy, interest rates,
competition and consumer confidence.

. The success of companies in this sector depends heavily on disposable
household income and consumer spending.

. Companies in this sector are subject to severe competition.

. Changes in demographics and consumer tastes can affect the success of consumer
products.

. Governmental regulation affecting the permissibility of using various food
additives and production methods could affect the profitability of companies
in this sector.

. Tobacco companies may be adversely affected by new laws and/or by litigation.

. The success of food, soft drink and fashion related products might be strongly
affected by fads, marketing campaigns and other factors affecting supply and
demand.

. The Fund is classified as "non-diversified." A non-diversified fund generally
will hold fewer stocks than a diversified fund. As a result, the Fund is more
susceptible to the risks associated with these particular companies, or to a
single economic, political or regulatory occurrence.

. The stocks in the Index may underperform fixed income investments and stock
market indices that track other markets, segments and sectors.

6
<PAGE>

Performance Information

As of the date of this Prospectus, the Fund has been in operation for less than
one full calendar year and therefore does not report its annual total returns in
a bar chart and average annual total returns in a table.

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers. iShares are
traded on the [Listing Exchange].

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.*

<TABLE>
<CAPTION>
<S> <C>
Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees
and Redemption Transaction Fees discussion below) None

Annual Fund Operating Expenses
(expenses that are deducted from the Fund's assets)**
Management Fees ___%
Distribution and Service (12b-1) Fees None
Other Expenses*** None
-----------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ___%
-----------------------------------------------------------------------------------------------------------------
</TABLE>

* You will incur customary brokerage commissions when buying or selling
shares of the Fund.

** Expressed as a percentage of average net assets.

*** The Trust's Investment Advisory Agreement provides that BGFA will pay
the operating expenses of the Trust, except interest expense and taxes
(expected to be de minimus), any future distribution fees or expenses
and extraordinary expenses.

Example

This Example is intended to help you compare the cost of investing in iShares
with the cost of investing in other funds.

The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your iShares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on the assumptions, your costs would be:

1 Year 3 Years

$___ $___

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 50,000 shares
or multiples thereof. As a practical matter, only institutions or large
investors purchase or redeem these Creation Units. A standard creation
transaction fee of $1,150 is charged to each purchaser of Creation Units. The
fee is a single charge and will be the same regardless of the number of Creation
Units purchased by an investor on the same day. The approximate value of a
Creation Unit as of September 29, 2000 was $2,596,250. An investor who holds
Creation Units and wishes to redeem them at NAV would also pay a Standard
Redemption Fee of $1,150 on the date of such redemption(s), regardless of the
number of Creation Units redeemed that day.* Investors who hold Creation Units
will also pay the annual fund operating expenses described in the table above.
Assuming an investment in a Creation Unit of $2,596,250 and a 5% return each
year, and assuming that the Fund's operating expenses remain the same, the total
costs would be $_______ if the Creation Unit is redeemed after one year, and
$_______ if the Creation Unit is redeemed after three years.

7
<PAGE>

* See Creations and Redemptions at the end of this Prospectus. If a Creation
Unit is purchased or redeemed outside the usual process through the National
Securities Clearing Corporation or for cash, a variable fee will be charged of
up to four times the standard creation or redemption transaction fee.

8
<PAGE>

iShares Goldman Sachs Cyclical

Industries Index Fund

Cusip: _____________
[Listing Exchange] Trading Symbol: ______________
Underlying Index: Goldman Sachs Cyclical Industries Sector Index
----------------------------------------------------------------

Investment Objective

The iShares Goldman Sachs Cyclical Industries Index Fund (the "Fund") seeks
investment results that correspond generally to the price and yield performance,
before fees and expenses, of the Goldman Sachs Cyclical Industries Sector Index
(the "Index").

Principal Investment Strategy

The Goldman Sachs Cyclical Sector Index has been developed by Goldman Sachs as
an equity benchmark for U.S.-traded cyclical stocks. The Index includes
companies in the following categories: providers of consumer and commercial
goods and services where performance is influenced by economic cycles, auto
manufacturers, construction companies, chemical producers, providers of
environmental services, manufacturers of machinery, commercial vehicles and
packaging containers, and providers of transportation services. The Fund uses a
Representative Sampling strategy to try to track the Index.

As of September 29, 2000, the Index consisted of 250 stocks. Its three largest
stocks were General Electric Co., Tyco International Ltd. New and Boeing Co.
(which comprised 8.56%, 7.54% and 4.92% respectively, of its market
capitalization). The Fund will concentrate its investments in a particular
industry or group of industries to approximately the same extent the Index is so
concentrated. As of September 29, 2000, the Index was concentrated in
_______________, which comprised ____% of its market capitalization (based on
the composition of the Index).

Principal Risks Specific to the Fund

. The success of product manufacturers and retailers is tied closely to the
performance of the domestic and international economy, interest rates,
competition and consumer confidence.

. The success of companies in this sector depends heavily on disposable
household income and consumer spending.

. Companies in this sector are subject to severe competition.

. Changes in demographics and consumer tastes can affect the success of consumer
products.

. The stocks in the Index may underperform fixed income investments and stock
market indices that track other markets, segments and sectors.

Performance Information

9
<PAGE>

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers. iShares are
traded on the [Listing Exchange].

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.*

<TABLE>
<CAPTION>
<S> <C>
Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees
and Redemption Transaction Fees discussion below) None

* You will incur customary brokerage commissions when buying or selling
shares of the Fund.

** Expressed as a percentage of average net assets.

Example

This Example is intended to help you compare the cost of investing in iShares
with the cost of investing in other funds.

1 Year 3 Years

$___ $___

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 50,000 shares
or multiples thereof. As a practical matter, only institutions or large
investors purchase or redeem these Creation Units. A standard creation
transaction fee of $1,000 is charged to each purchaser of Creation Units. The
fee is a single charge and will be the same regardless of the number of Creation
Units purchased by an investor on the same day. The approximate value of a
Creation Unit as of September 29, 2000 was $4,288,500. An investor who holds
Creation Units and wishes to redeem them at NAV would also pay a Standard
Redemption Fee of $1,000 on the date of such redemption(s), regardless of the
number of Creation Units redeemed that day.* Investors who hold Creation Units
will also pay the annual fund operating expenses described in the table above.
Assuming an investment in a Creation Unit of $4,288,500 and a 5% return each
year, and assuming that the Fund's operating expenses remain the same, the total
costs would be $_______ if the Creation Unit is redeemed after one year, and
$_______ if the Creation Unit is redeemed after three years.

_______________

10
<PAGE>

iShares Goldman Sachs Financials Index Fund

Cusip: _____________
[Listing Exchange] Trading Symbol: ______________
Underlying Index: Goldman Sachs Financials Sector Index
------------------------------------------------------------

Investment Objective

The iShares Goldman Sachs Financials Index Fund seeks investment results that
correspond generally to the price and yield performance, before fees and
expenses, of the Goldman Sachs Financials Sector Index (the "Index").

Principal Investment Strategy

The Goldman Sachs Financial Sector Index has been developed by Goldman Sachs as
an equity benchmark for U.S.-traded financial stocks. The Index includes
companies in the following categories: banking services, commercial and consumer
finance services, brokerage firms and asset managers, insurance companies, and
real estate companies. The Fund uses a Representative Sampling strategy to try
to track the Index.

As of September 29, 2000, the Index consisted of 255 stocks. Its three largest
stocks were American International Group Inc., Citigroup Inc. and Morgan Stanley
Dean Witter & Co. (which comprised 5.23%, 4.72% and 4.15% respectively, of its
market capitalization). The Fund will concentrate its investments in a
particular industry or group of industries to approximately the same extent the
Index is so concentrated. As of September 29, 2000, the Index was concentrated
in _______________, which comprised ____% of its market capitalization (based on
the composition of the Index).

Principal Risks Specific to the Fund

. Companies in this sector are subject to extensive governmental regulation
that affects the scope of their activities, the prices they can charge and
the amount of capital they must maintain.

. The profitability of companies in this sector is adversely affected by
increases in interest rates.

. The profitability of companies in this sector is adversely affected by loans
losses, which usually increase in economic downturns.

. Insurance companies may be subject to severe price competition.

. Newly enacted laws are expected to result in increased inter-industry
consolidation and competition in this sector.

. The stocks in the Index may underperform fixed income investments and stock
market indices that track other markets, segments and sectors.

Performance Information

11
<PAGE>

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers. iShares are
traded on the [Listing Exchange].

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.*

<TABLE>
<S> <C>
Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees
and Redemption Transaction Fees discussion below) None

Annual Fund Operating Expenses
(expenses that are deducted from the Fund's assets)**
Management Fees ___%
Distribution and Service (12b-1) Fees None
Other Expenses*** None
------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ___%
------------------------------------------------------------------------------------------------------------------
</TABLE>

* You will incur customary brokerage commissions when buying or selling
shares of the Fund.

** Expressed as a percentage of average net assets.

Example

This Example is intended to help you compare the cost of investing in iShares
with the cost of investing in other funds.

1 Year 3 Years

$___ $___

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 50,000 shares
or multiples thereof. As a practical matter, only institutions or large
investors purchase or redeem these Creation Units. A standard creation
transaction fee of $1,000 is charged to each purchaser of Creation Units. The
fee is a single charge and will be the same regardless of the number of Creation
Units purchased by an investor on the same day. The approximate value of a
Creation Unit as of September 29, 2000 was $2,768,250. An investor who holds
Creation Units and wishes to redeem them at NAV would also pay a Standard
Redemption Fee of $1,000 on the date of such redemption(s), regardless of the
number of Creation Units redeemed that day.* Investors who hold Creation Units
will also pay the annual fund operating expenses described in the table above.
Assuming an investment in a Creation Unit of $2,768,250 and a 5% return each
year, and assuming that the Fund's operating expenses remain the same, the total
costs would be $_______ if the Creation Unit is redeemed after one year, and
$_______ if the Creation Unit is redeemed after three years.

_______
* See Creations and Redemptions at the end of this Prospectus. If a Creation
Unit is purchased or redeemed outside the usual process through the National
Securities Clearing Corporation or for cash, a variable fee will be charged
of up to four times the standard creation or redemption transaction fee.

12
<PAGE>

iShares Goldman Sachs Healthcare Index Fund

Cusip: _____________
[Listing Exchange] Trading Symbol: ______________
Underlying Index: Goldman Sachs Healthcare Sector Index
-----------------------------------------------------------

Investment Objective

The iShares Goldman Sachs Healthcare Index Fund seeks investment results that
correspond generally to the price and yield performance, before fees and
expenses, of the Goldman Sachs Healthcare Sector Index (the "Index").

Principal Investment Strategy

The Goldman Sachs Healthcare Sector Index has been developed by Goldman Sachs as
an equity benchmark for U.S.-traded healthcare-related stocks. The Index
includes companies in the following categories: providers of healthcare related
services, researchers, manufacturers, and distributors of pharmaceuticals, drugs
and related sciences, and medical supplies, instruments and products.The Fund
uses a Representative Sampling strategy to try to track the Index.

As of September 29, 2000, the Index consisted of 113 stocks. Its three largest
stocks were Merck & Co. Inc., Johnson & Johnson and Bristol Myers Squibb Co.
(which comprised 7.80%, 7.15% and 7.09% respectively, of its market
capitalization). The Fund will concentrate its investments in a particular
industry or group of industries to approximately the same extent the Index is so
concentrated. As of September 29, 2000, the Index was concentrated in
_______________, which comprised ____% of its market capitalization (based on
the composition of the Index).

Principal Risks Specific to the Fund

. Many companies in this sector are heavily dependent on patent protection. The
expiration of patents may adversely affect the profitability of these
companies.

. Companies in this sector are subject to extensive litigation based on product
liability and similar claims.

. Companies in this sector are subject to competitive forces that may make it
difficult to raise prices and, in fact, may result in price discounting.

. Many new products in this sector are subject to the approval of the Food and
Drug Administration. The process of obtaining such approval is long and
costly.

. Companies in this sector may be thinly capitalized.

. Companies in this sector may be susceptible to product obsolescence.

. The stocks in the Index may underperform fixed income investments and stock
market indices that track other markets, segments and sectors.

Performance Information

13
<PAGE>

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers. iShares are
traded on the [Listing Exchange].

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.*

<TABLE>
<S> <C>
Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees
and Redemption Transaction Fees discussion below) None

* You will incur customary brokerage commissions when buying or selling
shares of the Fund.

** Expressed as a percentage of average net assets.

Example

This Example is intended to help you compare the cost of investing in iShares
with the cost of investing in other funds.

1 Year 3 Years

$___ $___

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 50,000 shares
or multiples thereof. As a practical matter, only institutions or large
investors purchase or redeem these Creation Units. A standard creation
transaction fee of $500 is charged to each purchaser of Creation Units. The fee
is a single charge and will be the same regardless of the number of Creation
Units purchased by an investor on the same day. The approximate value of a
Creation Unit as of September 29, 2000 was $3,656,250. An investor who holds
Creation Units and wishes to redeem them at NAV would also pay a Standard
Redemption Fee of $500 on the date of such redemption(s), regardless of the
number of Creation Units redeemed that day.* Investors who hold Creation Units
will also pay the annual fund operating expenses described in the table above.
Assuming an investment in a Creation Unit of $3,656,250 and a 5% return each
year, and assuming that the Fund's operating expenses remain the same, the total
costs would be $_______ if the Creation Unit is redeemed after one year, and
$_______ if the Creation Unit is redeemed after three years.

________
* See Creations and Redemptions at the end of this Prospectus. If a Creation
Unit is purchased or redeemed outside the usual process through the National
Securities Clearing Corporation or for cash, a variable fee will be charged
of up to four times the standard creation or redemption transaction fee.

14
<PAGE>

iShares Goldman Sachs Natural Resources Index Fund

Cusip: _____________
[Listing Exchange] Trading Symbol: ______________
Underlying Index: Goldman Sachs Natural Resources Sector Index
-----------------------------------------------------------------

Investment Objective

The iShares Goldman Sachs Natural Resources Index Fund seeks investment results
that correspond generally to the price and yield performance, before fees and
expenses, of the Goldman Sachs Natural Resources Sector Index (the "Index").

Principal Investment Strategy

The Goldman Sachs Natural Resources Sector Index has been developed by Goldman
Sachs as an equity benchmark for U.S.-traded natural resource-related stocks.
The Index includes companies in the following categories: extractive industries,
energy companies, owners and operators of timber tracts, forestry services,
producers of pulp and paper, and owners of plantations. The Fund uses a
Representative Sampling strategy to try to track the Index.

As of September 29, 2000, the Index consisted of 110 stocks. Its three largest
stocks were Exxon Mobil Corp., Enron Corp. and Royal Dutch Pete Co. (which
comprised 8.22%, 7.35% and 7.07% respectively, of its market capitalization).
The Fund will concentrate its investments in a particular industry or group of
industries to approximately the same extent the Index is so concentrated. As of
September 29, 2000, the Index was concentrated in _______________, which
comprised ____% of its market capitalization (based on the composition of the
Index).

Principal Risks Specific to the Fund

. The profitability of companies in this sector is related to worldwide energy
prices and exploration, and production spending.

. Companies in this sector are affected by government regulation, world events
and economic conditions.

. Companies in this sector are at risk for environmental damage claims.

. Companies in this sector could be adversely affected by commodity price
volatility, exchange rates, import controls and increased competition.

. Companies in this sector may be adversely affected by depletion of resources,
technical progress, labor relations, and government regulations.

. The stocks in the Index may underperform fixed income investments and stock
market indices that track other markets, segments and sectors.

Performance Information

15
<PAGE>

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers. iShares are
traded on the [Listing Exchange].

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.*

<TABLE>
<S> <C>
Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees
and Redemption Transaction Fees discussion below) None

Annual Fund Operating Expenses
(expenses that are deducted from the Fund's assets)**
Management Fees ___%
Distribution and Service (12b-1) Fees None
Other Expenses*** None
------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ___%
------------------------------------------------------------------------------------------------------------------
</TABLE>

* You will incur customary brokerage commissions when buying or selling
shares of the Fund.

** Expressed as a percentage of average net assets.

Example

This Example is intended to help you compare the cost of investing in iShares
with the cost of investing in other funds.

1 Year 3 Years

$___ $___

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 50,000 shares
or multiples thereof. As a practical matter, only institutions or large
investors purchase or redeem these Creation Units. A standard creation
transaction fee of $450 is charged to each purchaser of Creation Units. The fee
is a single charge and will be the same regardless of the number of Creation
Units purchased by an investor on the same day. The approximate value of a
Creation Unit as of September 29, 2000 was $2,750,250. An investor who holds
Creation Units and wishes to redeem them at NAV would also pay a Standard
Redemption Fee of $450 on the date of such redemption(s), regardless of the
number of Creation Units redeemed that day.* Investors who hold Creation Units
will also pay the annual fund operating expenses described in the table above.
Assuming an investment in a Creation Unit of $2,750,250 and a 5% return each
year, and assuming that the Fund's operating expenses remain the same, the total
costs would be $_______ if the Creation Unit is redeemed after one year, and
$_______ if the Creation Unit is redeemed after three years.

_____
* See Creations and Redemptions at the end of this Prospectus. If a Creation
Unit is purchased or redeemed outside the usual process through the National
Securities Clearing Corporation or for cash, a variable fee will be charged
of up to four times the standard creation or redemption transaction fee.

16
<PAGE>

iShares Goldman Sachs Technology Index Fund

Cusip: _____________
[Listing Exchange] Trading Symbol: ______________
Underlying Index: Goldman Sachs Technology Sector Index
----------------------------------------------------------

Investment Objective

The iShares Goldman Sachs Technology Index Fund seeks investment results that
correspond generally to the price and yield performance, before fees and
expenses, of the Goldman Sachs Technology Sector Index (the "Index").

Principal Investment Strategy

The Goldman Sachs Technology Sector Index has been developed by Goldman Sachs as
an equity benchmark for U.S.-traded technology-related stocks. The Index
includes companies in the following categories: producers of sophisticated
computer-related devises; electronics networking and Internet services;
producers of computer and Internet software; consultants for information
technology; and providers of computer services. The Fund uses a Representative
Sampling strategy to try to track the Index.

As of September 29, 2000, the Index consisted of 219 stocks. Its three largest
stocks were Cisco Systems Inc., Microsoft Corp. and Intel Corp. (which comprised
8.10%, 6.62% and 5.71% respectively, of its market capitalization). The Fund
will concentrate its investments in a particular industry or group of industries
to approximately the same extent the Index is so concentrated. As of September
29, 2000, the Index was concentrated in _______________, which comprised ____%
of its market capitalization (based on the composition of the Index).

Principal Risks Specific to the Fund

. Technology companies face intense competition, both domestically and
internationally.

. Technology companies may have limited product lines, markets, financial
resources or personnel.

. The products of technology companies may face product obsolescence due to
rapid technological developments and frequent new product introduction.

. Technology companies may face dramatic and often unpredictable changes in
growth rates and competition for the services of qualified personnel.

. Companies in this sector are heavily dependent on patent and intellectual
property rights. The loss or impairment of these rights may adversely affect
the profitability of these companies.

. The stocks in the Index may underperform fixed income investments and stock
market indices that track other markets, segments and sectors.

Performance Information

17
<PAGE>

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers. iShares are
traded on the [Listing Exchange].

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.*

<TABLE>
<S> <C>
Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees
and Redemption Transaction Fees discussion below) None

Annual Fund Operating Expenses
(expenses that are deducted from the Fund's assets)**
Management Fees ___%
Distribution and Service (12b-1) Fees None
Other Expenses*** None
------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ___%
------------------------------------------------------------------------------------------------------------------
</TABLE>

* You will incur customary brokerage commissions when buying or selling
shares of the Fund.

** Expressed as a percentage of average net assets.

Example

This Example is intended to help you compare the cost of investing in iShares
with the cost of investing in other funds.

1 Year 3 Years

$___ $___

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 50,000 shares
or multiples thereof. As a practical matter, only institutions or large
investors purchase or redeem these Creation Units. A standard creation
transaction fee of $900 is charged to each purchaser of Creation Units. The fee
is a single charge and will be the same regardless of the number of Creation
Units purchased by an investor on the same day. The approximate value of a
Creation Unit as of September 29, 2000 was $4,352,800. An investor who holds
Creation Units and wishes to redeem them at NAV would also pay a Standard
Redemption Fee of $900 on the date of such redemption(s), regardless of the
number of Creation Units redeemed that day.* Investors who hold Creation Units
will also pay the annual fund operating expenses described in the table above.
Assuming an investment in a Creation Unit of $4,352,800 and a 5% return each
year, and assuming that the Fund's operating expenses remain the same, the total
costs would be $_______ if the Creation Unit is redeemed after one year, and
$_______ if the Creation Unit is redeemed after three years.

______
* See Creations and Redemptions at the end of this Prospectus. If a Creation
Unit is purchased or redeemed outside the usual process through the National
Securities Clearing Corporation or for cash, a variable fee will be charged
of up to four times the standard creation or redemption transaction fee.

18
<PAGE>

iShares Goldman Sachs Utilities Index Fund

Cusip: _____________
[Listing Exchange] Trading Symbol: ______________
Underlying Index: Goldman Sachs Utilities Sector Index
-----------------------------------------------------------

Investment Objective

The iShares Goldman Sachs Utilities Index Fund seeks investment results that
correspond generally to the price and yield performance, before fees and
expenses, of the Goldman Sachs Utilities Sector Index (the "Index").

Principal Investment Strategy

The Goldman Sachs Utilities Sector Index has been developed by Goldman Sachs as
an equity benchmark for U.S.-traded utility-related stocks. The Index includes
companies in the following categories: generators and distributors of
electricity, distributors of natural gas and water, and providers of
telecommunications services, both fixed line networks and wireless/mobile
networks. The Fund uses a Representative Sampling strategy to try to track the
Index.

As of September 29, 2000, the Index consisted of 137 stocks. Its three largest
stocks were SBC Communications Inc., Verizon Communications and AT&T Corp.
(which comprised 8.90%, 7.66% and 7.09% respectively, of its market
capitalization). The Fund will concentrate its investments in a particular
industry or group of industries to approximately the same extent the Index is so
concentrated. As of September 29, 2000, the Index was concentrated in
_______________, which comprised ____% of its market capitalization (based on
the composition of the Index).

Principal Risks Specific to the Fund

. The rates of regulated utility companies are subject to review and limitation
by governmental regulatory commissions.

. The value of regulated utility debt securities (and, to a lesser extent,
equity securities) tends to have an inverse relationship to the movement of
interest rates.

. As deregulation allows utilities to diversify outside of their original
geographic regions and their traditional lines of business, utilities may
engage in riskier ventures where they have no experience.

. Deregulation is subjecting utility companies to greater competition and may
adversely affect profitability.

. The domestic telecommunications market is characterized by increasing
competition and regulation by the Federal Communications Commission and
various state regulatory authorities.

. Companies in this sector need to commit substantial capital to meet
increasing competition, particularly in formulating new products and services
using new technology.

. Technological innovations may make the products and services of
telecommunications companies obsolete.

. The stocks in the Index may underperform fixed income investments and stock
market indices that track other markets, segments and sectors.

Performance Information

As of the date of this Prospectus, the Fund has been in operation for less than
one full calendar year and therefore does not report

19
<PAGE>

its annual total returns in a bar chart and average annual total returns in a
table.

20
<PAGE>

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers. iShares are
traded on the [Listing Exchange].

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.*

<TABLE>
<CAPTION>
<S> <C>
Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees
and Redemption Transaction Fees discussion below) None

Annual Fund Operating Expenses
(expenses that are deducted from the Fund's assets)**
Management Fees ___%
Distribution and Service (12b-1) Fees None
Other Expenses*** None
------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ___%
------------------------------------------------------------------------------------------------------------------
</TABLE>

* You will incur customary brokerage commissions when buying or selling
shares of the Fund.

** Expressed as a percentage of average net assets.

Example

This Example is intended to help you compare the cost of investing in iShares
with the cost of investing in other funds.

1 Year 3 Years

$___ $___

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 50,000 shares
or multiples thereof. As a practical matter, only institutions or large
investors purchase or redeem these Creation Units. A standard creation
transaction fee of $600 is charged to each purchaser of Creation Units. The fee
is a single charge and will be the same regardless of the number of Creation
Units purchased by an investor on the same day. The approximate value of a
Creation Unit as of September 29, 2000 was $3,276,750. An investor who holds
Creation Units and wishes to redeem them at NAV would also pay a Standard
Redemption Fee of $600 on the date of such redemption(s), regardless of the
number of Creation Units redeemed that day.* Investors who hold Creation Units
will also pay the annual fund operating expenses described in the table above.
Assuming an investment in a Creation Unit of $3,276,750 and a 5% return each
year, and assuming that the Fund's operating expenses remain the same, the total
costs would be $_______ if the Creation Unit is redeemed after one year, and
$_______ if the Creation Unit is redeemed after three years.

21
<PAGE>

Description of iShares Funds

iShares Russell Index Funds

. iShares Russell Midcap Index Fund

. iShares Russell Midcap Growth Index Fund

. iShares Russell Midcap Value Index Fund

22
<PAGE>

Frank Russell Company, Russell Midcap Index, Russell Midcap Growth Index and
Russell Midcap Value Index are trademarks of Frank Russell Company and have been
licensed for use for certain purposes by BGI. The Funds that are based on the
Russell indices are not sponsored, endorsed, sold or promoted by Frank Russell
Company, and Frank Russell Company makes no representation regarding the
advisability of investing in iShares.

23
<PAGE>

iShares Russell Midcap Index Fund

Cusip: _____________
[Listing Exchange] Trading Symbol: ______________
Underlying Index: Russell Midcap Index
---------------------------------------------------

Investment Objective

The iShares Russell Midcap Index Fund seeks investment results that correspond
generally to the price and yield performance, before fees and expenses, of the
Russell Midcap Index (the "Index").

Principal Investment Strategy

The Russell Midcap Index is a capitalization-weighted index consisting of the
800 smallest companies in the Russell 1000 Index. The Russell Midcap Index
represents approximately 19% of the market capitalization of listed U.S.
equities. The Fund uses a Replication strategy to try to track the Index.

As of September 29, 2000, the Index consisted of 782 stocks. Its three largest
stocks were Palm Inc., Brocade Communications Sys Inc. and PE Corp. - PE
Biosystems Group (which comprised 0.97%, 0.84% and 0.79% respectively, of its
market capitalization).

Principal Risks Specific to the Fund

. The stocks in the Index may underperform fixed income investments and stock
market indices that track other markets, segments and sectors.

Performance Information

24
<PAGE>

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers. iShares are
traded on the [Listing Exchange].

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.*

<TABLE>
<CAPTION>
<S> <C>
Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees
and Redemption Transaction Fees discussion below) None

Annual Fund Operating Expenses
(expenses that are deducted from the Fund's assets)**
Management Fees ___%
Distribution and Service (12b-1) Fees None
Other Expenses*** None
--------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ___%
--------------------------------------------------------------------------------------------------------------------
</TABLE>

* You will incur customary brokerage commissions when buying or selling
shares of the Fund.

** Expressed as a percentage of average net assets.

Example

This Example is intended to help you compare the cost of investing in iShares
with the cost of investing in other funds.

1 Year 3 Years

$___ $___

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 50,000 shares
or multiples thereof. As a practical matter, only institutions or large
investors purchase or redeem these Creation Units. A standard creation
transaction fee of $3,000 is charged to each purchaser of Creation Units. The
fee is a single charge and will be the same regardless of the number of Creation
Units purchased by an investor on the same day. The approximate value of a
Creation Unit as of September 29, 2000 was $4,193,050. An investor who holds
Creation Units and wishes to redeem them at NAV would also pay a Standard
Redemption Fee of $3,000 on the date of such redemption(s), regardless of the
number of Creation Units redeemed that day.* Investors who hold Creation Units
will also pay the annual fund operating expenses described in the table above.
Assuming an investment in a Creation Unit of $4,193,050 and a 5% return each
year, and assuming that the Fund's operating expenses remain the same, the total
costs would be $_______ if the Creation Unit is redeemed after one year, and
$_______ if the Creation Unit is redeemed after three years.

_________
* See Creations and Redemptions at the end of this Prospectus. If a Creation
Unit is purchased or redeemed outside the usual process through the National
Securities Clearing Corporation or for cash, a variable fee will be charged
of up to four times the standard creation or redemption transaction fee.

25
<PAGE>

iShares Russell Midcap Growth Index Fund

Cusip: _____________
[Listing Exchange] Trading Symbol: ______________
Underlying Index: Russell Midcap Growth Index
----------------------------------------------------

Investment Objective

The iShares Russell Midcap Growth Index Fund seeks investment results that
correspond generally to the price and yield performance, before fees and
expenses, of the Russell Midcap Growth Index (the "Index").

Principal Investment Strategy

The Russell Midcap Growth Index measures the performance of the mid-
capitalization growth sector of the U.S. equity market. It is a subset of the
Russell Midcap Index, representing approximately 50% of the total market
capitalization of the Russell Midcap Index. The Index measures the performance
of those Russell Midcap Index companies with higher price-to-book ratios and
higher forecasted growth. The Fund uses a Replication strategy to try to track
the Index.

As of September 29, 2000, the Index consisted of 404 stocks. Its three largest
stocks were Palm Inc., Brocade Communications Systems Inc. and PE Corp. - PE
Biosystems Group (which comprised 2.47%, 2.13% and 2.01% respectively, of its
market capitalization).

Principal Risks Specific to the Fund

. Growth stocks may lack the dividend yield that can cushion stock prices in
market downturns.

. The stocks in the Index may underperform fixed income investments and stock
market indices that track other markets, segments and sectors.

Performance Information

26
<PAGE>

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers. iShares are
traded on the [Listing Exchange].

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.*

<TABLE>
<CAPTION>
<S> <C>
Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees
and Redemption Transaction Fees discussion below) None

Annual Fund Operating Expenses
(expenses that are deducted from the Fund's assets)**
Management Fees ___%
Distribution and Service (12b-1) Fees None
Other Expenses*** None
------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ___%
------------------------------------------------------------------------------------------------------
</TABLE>

* You will incur customary brokerage commissions when buying or selling
shares of the Fund.

** Expressed as a percentage of average net assets.

Example

This Example is intended to help you compare the cost of investing in iShares
with the cost of investing in other funds.

1 Year 3 Years

$___ $___

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 50,000 shares
or multiples thereof. As a practical matter, only institutions or large
investors purchase or redeem these Creation Units. A standard creation
transaction fee of $1,600 is charged to each purchaser of Creation Units. The
fee is a single charge and will be the same regardless of the number of Creation
Units purchased by an investor on the same day. The approximate value of a
Creation Unit as of September 29, 2000 was $5,222,000. An investor who holds
Creation Units and wishes to redeem them at NAV would also pay a Standard
Redemption Fee of $1,600 on the date of such redemption(s), regardless of the
number of Creation Units redeemed that day.* Investors who hold Creation Units
will also pay the annual fund operating expenses described in the table above.
Assuming an investment in a Creation Unit of $5,222,000 and a 5% return each
year, and assuming that the Fund's operating expenses remain the same, the total
costs would be $_______ if the Creation Unit is redeemed after one year, and
$_______ if the Creation Unit is redeemed after three years.

27
<PAGE>

iShares Russell Midcap Value Index Fund

Cusip: _____________
[Listing Exchange] Trading Symbol: ______________
Underlying Index: Russell Midcap Value Index
------------------------------------------------------

Investment Objective

The iShares Russell Midcap Value Index Fund seeks investment results that
correspond generally to the price and yield performance, before fees and
expenses, of the Russell Midcap Value Index (the "Index").

Principal Investment Strategy

The Russell Midcap Value Index measures the performance of the mid-
capitalization value sector of the U.S. equity market. It is a subset of the
Russell Midcap Index, representing approximately 50% of the total market
capitalization of the Russell Midcap Index. The Index measures the performance
of those Russell Midcap Index companies with lower price-to-book ratios and
lower forecasted growth. The Fund uses a Replication strategy to try to track
the Index.

As of September 29, 2000, the Index consisted of 606 stocks. Its three largest
stocks were Lehman Brothers Holdings Inc., Hartford Financial Services Group and
Unitedhealth Group Inc. (which comprised 0.96%, 0.88% and 0.78% respectively, of
its market capitalization).

Principal Risks Specific to the Fund

. Value stocks can continue to be inexpensive for long periods of time and may
not ever realize their full value.

. The stocks in the Index may underperform fixed income investments and stock
market indices that track other markets, segments and sectors.

Performance Information

28
<PAGE>

Fees and Expenses

Most investors will buy and sell shares of the Fund through brokers. iShares are
traded on the [Listing Exchange].

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.*

<TABLE>
<CAPTION>
<S> <C>
Shareholder Fees
(fees paid directly from your investment, but see the Creation Transaction Fees
and Redemption Transaction Fees discussion below) None

Annual Fund Operating Expenses
(expenses that are deducted from the Fund's assets)**
Management Fees ___%
Distribution and Service (12b-1) Fees None
Other Expenses*** None
--------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses ___%
--------------------------------------------------------------------------------------------------
</TABLE>

* You will incur customary brokerage commissions when buying or selling
shares of the Fund.

** Expressed as a percentage of average net assets.

Example

This Example is intended to help you compare the cost of investing in iShares
with the cost of investing in other funds.

1 Year 3 Years

$___ $___

Creation Transaction Fees and Redemption Transaction Fees

The Fund issues and redeems shares at NAV only in large blocks of 50,000 shares
or multiples thereof. As a practical matter, only institutions or large
investors purchase or redeem these Creation Units. A standard creation
transaction fee of $2,400 is charged to each purchaser of Creation Units. The
fee is a single charge and will be the same regardless of the number of Creation
Units purchased by an investor on the same day. The approximate value of a
Creation Unit as of September 29, 2000 was $5,608,500. An investor who holds
Creation Units and wishes to redeem them at NAV would also pay a Standard
Redemption Fee of $2,400 on the date of such redemption(s), regardless of the
number of Creation Units redeemed that day.* Investors who hold Creation Units
will also pay the annual fund operating expenses described in the table above.
Assuming an investment in a Creation Unit of $5,608,500 and a 5% return each
year, and assuming that the Fund's operating expenses remain the same, the total
costs would be $_______ if the Creation Unit is redeemed after one year, and
$_______ if the Creation Unit is redeemed after three years.

29
<PAGE>

Management

Investment Advisor

As investment advisor, BGFA has overall responsibility for the general
management and administration of the Trust. BGFA provides an investment program
for each Fund and manages the investment of its assets. BGFA uses teams of
portfolio managers, investment strategists and other investment specialists.
This team-approach brings together many disciplines and leverages BGFA's
extensive resources. BGFA also arranges for transfer agency, custody, fund
administration and all other non-distribution related services necessary for the
Funds to operate.

BGFA will receive fees from each Fund based on rates of each Fund's average
daily net assets, as shown in the following table.

iShares Index Fund Management Fee
------------------ --------------

iShares Goldman Sachs Consumer Industries Index Fund __%
iShares Goldman Sachs Cyclical Industries Index Fund __%
iShares Goldman Sachs Financials Index Fund __%
iShares Goldman Sachs Healthcare Index Fund __%
iShares Goldman Sachs Natural Resources Index Fund __%
iShares Goldman Sachs Technology Index Fund __%
iShares Goldman Sachs Utilities Index Fund __%
iShares Russell Midcap Index Fund __%
iShares Russell Midcap Growth Index Fund __%
iShares Russell Midcap Value Index Fund __%

BGFA is located at 45 Fremont Street, San Francisco, CA 94105. It is a wholly-
owned subsidiary of BGI, which in turn is an indirect subsidiary of Barclays
Bank PLC. BGI, together with its affiliates, is the world's largest investment
advisor of institutional investment assets. As of June 30, 2000, BGI and its
affiliates, including BGFA, provided investment advisory services for assets in
excess of $819 billion. BGI, BGFA, Barclays Global Investor Services, Barclays
Bank and their affiliates deal, trade and invest for their own accounts in the
types of securities in which the Funds portfolios may also invest.

Administrator, Custodian, Transfer Agent and Securities Lending Agent

Investors Bank & Trust Company ("IBT") is the administrator, custodian, transfer
agent and securities lending agent for each Fund.

Shareholder Information

Additional shareholder information, including how to buy and sell iShares of any
Fund, is available free of charge by calling toll-free: 1-800-iShares.

Buying and Selling iShares

iShares trade on an auction market on the Listing Exchange during the trading
day and can be bought and sold throughout the trading day like other shares of
publicly traded stocks. iShares may trade on a Listing Exchange until 4:15
(Eastern time) every day the Listing Exchange is open. There is no minimum
investment, although generally iShares are purchased in "round lots" of 100
iShares. When buying or selling iShares through a broker, you will incur
customary brokerage commissions and charges.

30
<PAGE>

iShares may be acquired or redeemed directly from the Fund only in Creation
Units, as discussed in the Creations and Redemptions section.

iShares trade under the ticker symbols listed in this Prospectus.

Each Listing Exchange is generally open Monday through Friday and is closed on
weekends and the following holidays: New Year's Day, Martin Luther King, Jr.
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

Section 12(d)(1) of the Investment Company Act of 1940 restricts investments by
registered investment companies in the securities of other investment companies,
including iShares.

Book Entry

iShares are held in book-entry form, which means that no stock certificates are
issued. Depository Trust Company ("DTC") or its nominee, is the record owner of
all outstanding iShares of each Fund and is recognized as the owner of all
iShares for all purposes.

Investors owning iShares are beneficial owners as shown on the records of DTC or
its participants. DTC serves as the securities depository for all iShares.
Participants include DTC, securities brokers and dealers, banks, trust
companies, clearing corporations and other institutions that directly or
indirectly maintain a custodial relationship with DTC. As a beneficial owner of
iShares, you are not entitled to receive physical delivery of stock certificates
or to have iShares registered in your name, and you are not considered a
registered owner of iShares. Therefore, to exercise any right as an owner of
iShares, you must rely upon the procedures of DTC and its participants. These
procedures are the same as those that apply to any other stocks that you hold in
book entry or "street name" form.

iShare Prices

The trading prices of iShares on the listing Exchange may differ in varying
degrees from their daily NAVs and can be affected by market forces such as
supply and demand, economic conditions and other factors. In addition, in the
case of a fund that invests in securities that primarily trade on a foreign
exchange, since such foreign exchange may be open on days when the Fund or a
Listing Exchange is closed, shareholders may not be able to purchase or redeem
iShares from the Fund or buy or sell iShares on the Listing Exchange on days
when the NAV of the Fund is significantly affected by events in foreign markets.

The approximate value of iShares of each Fund will be disseminated by the
listing Exchange (except the iShares S&P Europe 350 Index Fund and iShares
S&P/TSE 60 Index Fund) every fifteen seconds. The approximate values of iShares
of the iShares S&P Europe 350 Index Fund and the iShares S&P/TSE 60 Index Fund
will be provided on a similar basis by Bloomberg. This approximate value should
not be viewed as a "real-time" update of the NAV per iShare of any Fund, because
the approximate value may not be calculated in the same manner as the NAV, which
is computed once a day. The Funds are not involved in, or responsible for, the
calculation or dissemination of such amount and make no warranty as to its
accuracy.

Determining NAV

IBT calculates each Fund's NAV in accordance with the standard formula for
valuing mutual fund shares at the close of regular trading (normally 4 p.m.
Eastern time) every day the New York Stock Exchange is open. The formula calls
for deducting all of a Fund's liabilities from the total value of its assets and
dividing the result by the number of shares outstanding. IBT values the
securities at their current market prices. If such prices are not readily
available, IBT uses estimates of the securities' fair value in accordance with
guidelines approved by the Trust's Board of Trustees.

31
<PAGE>

Dividends and Distributions

Each Fund pays out dividends to investors at least annually and may pay them on
a more frequent basis. All the Funds distribute their net capital gains, if any,
to investors annually.

Taxes

As with any investment, you should consider how your investment in iShares will
be taxed. The tax information in this prospectus is provided as general
information. You should consult your own tax professional about the tax
consequences of an investment in iShares.

Unless your investment in iShares is made through a tax-exempt entity or tax-
deferred retirement account, such as an IRA plan, you need to be aware of the
possible tax consequences when:

. Each Fund makes distributions, and
. You sell iShares.

Taxes on Distributions

Dividends from net investment income, if any, are declared and paid at least
annually by each Fund. In general, your distributions are subject to federal
income tax for the year when they are paid. Certain dividends paid in January,
however, may be treated as paid in the prior year. A distribution may be taxable
to you as ordinary income or as capital gain.

Dividends paid out of a Fund's net investment income and net short-term capital
gains, if any, are taxable as ordinary income. Distributions of net long-term
capital gains, if any, in excess of net short-term capital losses are taxable as
long-term capital gains, regardless of how long you have held the iShares.

Dividends and interest received by each Fund with respect to foreign securities
may give rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Since more than 50% of the total assets of the S&P Europe
350 Index Fund and the S&P/TSE 60 Index Fund will almost certainly consist of
foreign stocks or securities, those Funds intend to "pass through" to you
certain foreign income taxes (including withholding taxes) paid by those Funds.
This means that you will be considered to have received as an additional
dividend your share of such foreign taxes, but you may be entitled to either a
corresponding tax deduction in calculating your taxable income, or, subject to
certain limitations, a credit in calculating your federal income tax.

If you are neither a lawful permanent resident nor a citizen of the United
States or if you are a foreign entity, each Fund's ordinary income dividends
(which include distributions of net short-term capital gains) will generally be
subject to a 30% U.S. withholding tax, unless a lower treaty rate applies.

Each Fund must withhold 31% of a shareholder's distributions and proceeds if the
shareholder has not provided a correct taxpayer identification number or social
security number in the manner required by law.

Taxes when iShares are Sold

Currently, any capital gain or loss realized upon a sale of iShares is generally
treated as long-term capital gain or loss if iShares have been held for more
than one year and as short-term capital gain or loss if iShares have been held
for one year or less.

The foregoing discussion summarizes some of the consequences under current
federal tax law of an investment in a Fund. It is not a substitute for personal
tax advice. You may also be subject to state and local taxation on Fund
distributions, and sales of iShares. Consult your personal tax adviser about the
potential tax consequences of an investment in iShares under all applicable tax
laws.

32
<PAGE>

Creations and Redemptions

The iShares that trade on a Listing Exchange are "created" at their NAV by
market makers, large investors and institutions only in block-size Creation
Units of 50,000 iShares. Each "creator" enters into an authorized participant
agreement with SEI Investment Distribution Company, the Funds' distributor, and
deposits into the applicable Fund a portfolio of stocks closely approximating
the holdings of the Fund and a specified amount of cash in exchange for 50,000
iShares.

Similarly, iShares can only be redeemed in Creation Units of 50,000 iShares,
principally in-kind for a portfolio of stocks held by the Fund and a specified
amount of cash. Except when aggregated in Creation Units, iShares are not
redeemable. The prices at which creations and redemptions occur are based on the
next calculation of NAV after an order is received in a form proscribed in the
authorized participant agreement.

Creations and redemptions must be made through a firm that is either a member of
the Continuous Net Settlement System of the National Securities Clearing
Corporation or a DTC Participant. Information about the procedures regarding
creation and redemption of Creation Units is included in the Statement of
Additional Information.

iShares Index Funds Transaction Fees

Each Fund will impose a purchase transaction fee and a redemption transaction
fee to offset transfer and other transaction costs associated with the issuance
and redemption of Creation Units of iShares. Purchasers and redeemers of
Creation Units of iShares for cash are required to pay an additional variable
charge to compensate for brokerage and market impact expenses. The creation and
redemption transaction fees for creations and redemptions in kind for each Fund
are listed below. The standard creation transaction fee is charged to each
purchaser on the day such purchaser creates a Creation Unit. The fee is a single
charge and will be the amount indicated below regardless of the number of
Creation Units purchased by an investor on the same day. Similarly, the standard
redemption transaction fee will be the amount indicated regardless of the number
of Creation Units redeemed that day. The creation and redemption transaction
fees for creations and redemptions (i) for domestic Funds made through DTC and
(ii) for all Funds made for cash (when cash creations and redemptions are
available or specified) will also be subject to an additional variable charge of
up to a maximum of four times the amount shown below under "Maximum
Creation/Redemption Transaction Fee". In addition, purchasers of iShares in
Creation Units are responsible for payment of the costs of transferring the
Deposit Securities to the Trust. Redeemers of iShares in Creation Units are
responsible for the costs of transferring the Fund Securities from the Trust to
their accounts or on their order. Investors who use the services of a broker or
other such intermediary may pay fees for such services. The following table also
shows, as of September 29, 2000, the approximate cost of one Creation Unit per
Fund, including the creation transaction fee.

<TABLE>
<CAPTION>
Approximate
Value of a
Creation Standard Maximum
Unit Creation/ Creation/
as of Redemption Redemption
September 29, Transaction Transaction
Name of Fund 2000 Fee Fee
------------ ---------- ------------ -------------
<S> <C> <C> <C>
iShares Goldman Sachs Consumer Industries Index Fund $2,596,250 $1,150 $ 4,600
iShares Goldman Sachs Cyclical Industries Index Fund $4,288,500 $1,000 $ 4,000
iShares Goldman Sachs Financials Index Fund $2,768,250 $1,000 $ 4,000
iShares Goldman Sachs Healthcare Index Fund $3,656,250 $ 500 $ 2,000
iShares Goldman Sachs Natural Resources Index Fund $2,750,250 $ 450 $ 1,800
iShares Goldman Sachs Technology Index Fund $4,352,800 $ 900 $ 3,600
iShares Goldman Sachs Utilities Index Fund $3,276,750 $ 600 $ 2,400
iShares Russell Midcap Index Fund $4,193,050 $3,000 $12,000
iShares Russell Midcap Growth Index Fund $5,222,000 $1,600 $ 6,400
iShares Russell Midcap Value Index Fund $5,608,500 $2,400 $ 9,600
</TABLE>

33
<PAGE>

Distribution

SEI Investments Distribution Company serves as the distributor of Creation Units
for each Fund on an agency basis. The Distributor does not maintain a secondary
market in iShares. The Distributor's principal address is 1 Freedom Valley
Drive, Oaks, PA 19456.

The Distributor has no role in determining the policies of any Fund or the
securities that are purchased or sold by any Fund.

Index Providers

Goldman Sachs is a leading global investment banking and securities firm,
providing a full range of investing, advisory and financing services worldwide
to a substantial and diversified client base, which includes corporations,
financial institutions, governments and high net worth individuals. Founded in
1869, it is one of the oldest and largest investment banking firms. The Firm is
headquartered in New York and maintains offices in London, Frankfurt, Tokyo,
Hong Kong and other major financial centers around the world.

Frank Russell Company is an investment services firm offering a variety of
investment management products and services. The family of indices created by
the Frank Russell Company includes the Russell 1000(R), Russell 2000(R), Russell
3000(R), as well as mid-capitalization, value, and growth style indices. Frank
Russell Company and Mellon Bank Corporation, parent holding company of
Pittsburgh and Boston-based Mellon Trust, operate a joint venture known as
Russell/Mellon Analytical Services LLC. Russell/Mellon Analytical Services
provides the financial community with financial information and analytical
services and calculates the underlying data in the Russell indices.

BGI has entered into a license agreement with each of the Index Providers to use
the Underlying Indices. BGI is sub-licensing rights in the Underlying Indices to
the iShares Trust at no charge.

34
<PAGE>

Disclaimers

The iShares Trust is not sponsored, endorsed, sold or promoted by Goldman, Sachs
& Co. ("Goldman Sachs"). Goldman Sachs makes no representation or warranty,
express or implied, to the owners of the iShares or any member of the public
regarding the advisability of investing in securities generally or in iShares,
particularly or the ability of the Goldman Sachs Indices to track general stock
market performance. Goldman, Sachs & Co. is the licensor of certain trademarks,
service marks, and trade names. The Goldman Sachs Indices on which the Funds are
based are determined, composed and calculated by Goldman Sachs without regard to
BGI, BGFA or the Funds. Goldman Sachs has no obligation to take the needs of
BGI, BGFA or the owners of iShares into consideration in determining, composing
or calculating the Goldman Sachs Indices. Goldman Sachs is not responsible for
and has not participated in the determination of the prices and amount of
iShares or the timing of the issuance or sale of iShares. Goldman Sachs has no
obligation or liability in connection with the administration of the Trust or
the marketing or trading of iShares. Although Goldman Sachs obtains information
for inclusion or use in the calculation of the Goldman Sachs Indices from
sources that Goldman Sachs considers reliable, Goldman Sachs does not guarantee
the accuracy and/or the completeness of the Goldman Sachs Indices or any data
included therein. Goldman Sachs shall have no liability for any errors,
omissions, or interruptions therein. Goldman Sachs makes no warranty, express or
implied, as to results to be obtained by BGI, BGFA or owners of iShares, or any
other person or entity from the use of the Goldman Sachs Indices or any data
included therein. Goldman Sachs makes no express or implied warranties, and
expressly disclaims all warranties of merchantability or fitness for a
particular purpose or use with respect to the Goldman Sachs Indices or any data
included therein. Without limiting any of the foregoing, in no event shall
Goldman Sachs have any liability for any special, punitive, direct, indirect, or
consequential damages (including lost profits) resulting from the use of the
Goldman Sachs Indices or any data included therein, even if notified of the
possibility of such damages.

The iShares Trust is not sponsored, endorsed, sold or promoted by Frank Russell
Company ("FRC"). FRC makes no representation or warranty, express or implied, to
the owners of the iShares or any member of the public regarding the advisability
of investing in securities generally or in iShares, particularly or the ability
of the Russell Indices to track general stock market performance. Frank Russell
Company is the licensor of certain trademarks, service marks, and trade names.
The Russell Indices on which the Funds are based are determined, composed and
calculated by FRC without regard to BGI, BGFA or the Funds. FRC has no
obligation to take the needs of BGI, BGFA or the owners of iShares into
consideration in determining, composing or calculating the Russell Indices. FRC
is not responsible for and has not participated in the determination of the
prices and amount of iShares or the timing of the issuance or sale of iShares.
FRC has no obligation or liability in connection with the administration of the
Trust or the marketing or trading of iShares. Although FRC obtains information
for inclusion or use in the calculation of the Russell Indices from sources that
FRC considers reliable, FRC does not guarantee the accuracy and/or the
completeness of the Russell Indices or any data included therein. FRC shall have
no liability for any errors, omissions, or interruptions therein. FRC makes no
warranty, express or implied, as to results to be obtained by BGI, BGFA or
owners of iShares, or any other person or entity from the use of the Russell
Indices or any data included therein. FRC makes no express or implied
warranties, and expressly disclaims all warranties of merchantability or fitness
for a particular purpose or use with respect to the Russell Indices or any data
included therein. Without limiting any of the foregoing, in no event shall FRC
have any liability for any special, punitive, direct, indirect, or consequential
damages (including lost profits) resulting from the use of the Russell Indices
or any data included therein, even if notified of the possibility of such
damages.

iShares are not sponsored, endorsed or promoted by the [Listing Exchange]. The
[Listing Exchange] makes no representation or warranty, express or implied, to
the owners of the iShares of any Fund or any member of the public regarding the
ability of a fund to track the total return performance of the various
Underlying Indices or the ability of the Underlying Indices identified herein to
track stock market performance. The Underlying Indices identified herein are
determined, composed and calculated by Goldman, Sachs & Co. and the Frank
Russell Company without regard to the iShares of any Fund. The [Listing
Exchange] is not responsible for, nor has it participated in, the determination
of the compilation or the calculation of the Underlying Indices, nor in the
determination of the timing of, prices of, or quantities of the iShares of any
Fund to be issued, nor in the determination or calculation of the equation by
which the iShares are redeemable. The [Listing Exchange] has no obligation or
liability to owners of the iShares of any Fund in connection with the
administration, marketing or trading of the iShares of any Fund.

The [Listing Exchange] does not guarantee the accuracy and/or the completeness
of any indices or any data included therein. The [Listing Exchange] makes no
warranty, express or implied, as to results to be obtained by the iShares Trust
on behalf of its Funds as licensee, licensee's customers and counterparties,
owners of the iShares, or any other person or

35
<PAGE>

entity from the use of the subject indices or any data included therein in
connection with the rights licensed as described herein or for any other use.
The [Listing Exchange] makes no express or implied warranties, and hereby
expressly disclaims all warranties of merchantability or fitness for a
particular purpose with respect to the Index or any data included therein.
Without limiting any of the foregoing, in no event shall the [Listing Exchange]
have any liability for any direct, indirect, special, punitive, consequential or
any other damages (including lost profits) even if notified of the possibility
of such damages.

BGFA does not guarantee the accuracy and/or the completeness of the Underlying
Indices or any data included therein and BGFA shall have no liability for any
errors, omissions, or interruptions therein.

BGFA makes no warranty, express or implied, as to results to be obtained by the
Funds, owners of the iShares of any Fund, or any other person or entity from the
use of the Underlying Indices or any data included therein. BGFA makes no
express or implied warranties, and expressly disclaims all warranties of
merchantability or fitness for a particular purpose or use with respect to the
Underlying Indices or any data included therein. Without limiting any of the
foregoing, in no event shall BGFA have any liability for any special, punitive,
direct, indirect, or consequential damages (including lost profits), even if
notified of the possibility of such damages.

36
<PAGE>

For more detailed information on the iShares Trust and iShares, you may request
a copy of the Statement of Additional Information ("SAI").

The SAI provides detailed information about the Funds, and is incorporated by
reference into this Prospectus. This means that the SAI, for legal purposes, is
a part of this Prospectus.

If you have questions about the Funds or iShares or you wish to obtain the SAI
free of charge, please:

Call: 1-800-iShares
Monday through Friday
8:00 a.m. to 8:00 p.m. (Eastern time)

Write: iShares Trust
c/o SEI Investments Distribution Company
1 Freedom Valley Drive
Oaks, PA 19456

Visit: www.iShares.com

Information about the Fund (including the SAI) can be reviewed and copied at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.,
and information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-202-942-8090. Reports and other information about
the Fund are available on the EDGAR Database on the Commission's Internet site
at www.sec.gov, and copies of this information may be obtained, after paying a
duplicating fee, by electronic request at the following E-mail address:

[email protected], or by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102. The iShares Trust's registration number under the
Investment Company Act of 1940 is 811-09729.

No person is authorized to give any information or to make any representations
about any Fund and its iShares not contained in this Prospectus and you should
not rely on any other information. Read and keep the Prospectus for future
reference.

Investment Company Act File No. 811-0972

37
<PAGE>

iShares Trust

Statement of Additional Information for

iShares Goldman Sachs Consumer Industries Index Fund

iShares Goldman Sachs Cyclical Industries Index Fund

iShares Goldman Sachs Financials Index Fund

iShares Goldman Sachs Healthcare Index Fund

iShares Goldman Sachs Natural Resources Index Fund

iShares Goldman Sachs Technology Index Fund

iShares Goldman Sachs Utilities Index Fund

iShares Russell Midcap Index Fund

iShares Russell Midcap Growth Index Fund

iShares Russell Midcap Value Index Fund

Dated _______________, 2000

This Statement of Additional Information is not a Prospectus. It should be read
in conjunction with the Prospectus dated __________, 2000 (the "Prospectus") of
iShares Trust (the "Trust") for the funds listed above (each a "Fund" and
collectively the "Funds"), as such Prospectus may be revised from time to time.
Capitalized terms used herein that are not defined have the same meaning as in
the Prospectus, unless otherwise noted. A copy of the Prospectus may be obtained
without charge by writing to the Trust's Distributor, SEI Investments
Distribution Company, at 1 Freedom Valley Drive, Oaks, PA 19456 or calling
1-800-iShares.
<PAGE>

Table of Contents

<TABLE>
<S> <C>
General Description of the Trust and its Funds.............................................................
Exchange Listing and Trading...............................................................................
Investment Strategies and Risks............................................................................
Lack of Diversification of Certain Funds...................................................................
Loans of Portfolio Securities..............................................................................
Repurchase Agreements......................................................................................
Reverse Repurchase Agreements..............................................................................
Currency Transactions......................................................................................
Money Market Instruments...................................................................................
Foreign Securities.........................................................................................
Investment Companies, REITs................................................................................
Illiquid Securities........................................................................................
Futures and Options........................................................................................
Options on Futures Contracts...............................................................................
Restrictions on the Use of Futures Contracts and Options on Futures Contracts..............................
Swap Agreements............................................................................................
Future Developments........................................................................................
General Considerations and Risks...........................................................................
Risks of Futures and Options Transactions..................................................................
Risks of Swap Agreements...................................................................................
Construction and Maintenance Standards for the Underlying Indices..........................................
Index Dissemination........................................................................................
The Goldman Sachs Indices Generally........................................................................
Goldman Sachs Consumer Industries Index Fund...............................................................
Goldman Sachs Cyclical Industries Index Fund...............................................................
Goldman Sachs Financials Index Fund........................................................................
Goldman Sachs Healthcare Index Fund........................................................................
Goldman Sachs Natural Resources Index Fund.................................................................
Goldman Sachs Technology Index Fund........................................................................
Goldman Sachs Utilities Index Fund.........................................................................
The Russell Indices Generally..............................................................................
Russell Midcap Index Fun...................................................................................
Russell Midcap Growth Index Fund...........................................................................
Russell Midcap Value Index Fund............................................................................
Investment Limitations.....................................................................................
Continuous Offering........................................................................................
Management.................................................................................................
Trustees and Officers......................................................................................
Remuneration of Trustees and Officers......................................................................
Investment Advisor.........................................................................................
Administrator, Custodian, Transfer Agent and Securities Lending Agent......................................
Distributor................................................................................................
Index Providers............................................................................................
Brokerage Transactions.....................................................................................
Additional Information Concerning the Trust................................................................
Capital Stock..............................................................................................
Book Entry Only System.....................................................................................
DTC Acts as Securities Depository for the iShares..........................................................
Creation and Redemption of Creation Unit Aggregations......................................................
Creation...................................................................................................
Fund Deposit...............................................................................................
Procedures for Creation of Creation Unit Aggregations......................................................
Placement of Creation Orders for Domestic Funds Using Clearing Process.....................................
</TABLE>

i
<PAGE>

<TABLE>
<S> <C>
Placement of Creation Orders for Domestic Funds Outside Clearing Process...................................
Placement of Creation Orders for Foreign Funds.............................................................
Acceptance of Orders for Creation Unit Aggregations........................................................
Creation Transaction Fee...................................................................................
Redemption of iShares in Creation Unit Aggregations........................................................
Redemption Transaction Fee.................................................................................
Placement of Redemption Orders for Domestic Funds Using Clearing Process...................................
Placement of Redemption Orders for Domestic Funds Outside Clearing Process.................................
Placement of Redemption Orders for Foreign Funds...........................................................
Foreign Market Hours.......................................................................................
Regular Holidays...........................................................................................
Settlement Periods Greater than Seven Days in 2000.........................................................
Taxes......................................................................................................
Federal Tax Treatment of Futures and Options Contracts.....................................................
Determination of NAV.......................................................................................
Dividends and Distributions................................................................................
General Policies...........................................................................................
Dividend Reinvestment Service..............................................................................
Performance and Other Information..........................................................................
Miscellaneous Information..................................................................................
Counsel....................................................................................................
Independent Auditors.......................................................................................
Financial Statements.......................................................................................
Report of Independent Accountants..........................................................................
</TABLE>

ii
<PAGE>

General Description of the Trust
and its Funds

The Trust currently consists of 49 investment portfolios (each a "fund" and
collectively the "funds"). The Trust was organized as a Delaware business trust
on December 16, 1999 and is authorized to have multiple series or portfolios.
Each fund in the Trust is an open-end management investment company, registered
under the Investment Company Act of 1940, as amended (the "1940 Act"). This
Statement of Additional Information relates solely to the following funds (each
a "Fund and collectively the "Funds"):

<TABLE>
<S> <C>
. iShares Goldman Sachs Consumer Industries Index Fund . iShares Russell Midcap Index Fund
. iShares Goldman Sachs Cyclical Industries Index Fund . iShares Russell Midcap Growth Index Fund
. iShares Goldman Sachs Financials Index Fund . iShares Russell Midcap Value Index Fund
. iShares Goldman Sachs Healthcare Index Fund
. iShares Goldman Sachs Natural Resources Index Fund
. iShares Goldman Sachs Technology Index Fund
. iShares Goldman Sachs Utilities Index Fund
</TABLE>

3
<PAGE>

The shares of each Fund are referred to herein as "iShares".

The investment objective of each Fund is to provide investment results that
correspond generally to the price and yield performance, before fees and
expenses, of a specified benchmark index (each an "Underlying Index")
representing publicly traded equity securities of companies in a particular
broad market, market segment, market sector or group of industries. Each Fund is
managed by Barclays Global Fund Advisors ("BGFA").

Each Fund offers and issues iShares at their net asset value ("NAV") only in
aggregations of a specified number of iShares (each a "Creation Unit" or a
"Creation Unit Aggregation"), generally in exchange for a basket of equity
securities included in its Underlying Index (the "Deposit Securities"), together
with the deposit of a specified cash payment (the "Cash Component"). The iShares
described in this Prospectus are listed on a national securities exchange (a
"Listing Exchange"). The American Stock Exchange LLC (the "AMEX"), the New York
Stock Exchange , Inc. (the "NYSE") and the Chicago Board Options Exchange (the
"CBOE") are each referred to herein as a Listing Exchange. iShares will trade on
a Listing Exchange at market prices that may be below, at, or above NAV. iShares
are redeemable only in Creation Unit aggregations, and, generally, in exchange
for portfolio securities and a specified cash payment. Creation Units are
aggregations of 50,000 iShares.

The Trust reserves the right to offer a "cash" option for creations and
redemptions of iShares although it has no current intention of doing so. iShares
may be issued in advance of receipt of Deposit Securities subject to various
conditions including a requirement to maintain on deposit with the Trust cash at
least equal to 125% of the market value of the missing Deposit Securities. See
the Creation and Redemption of Creation Unit Aggregations section. In each
instance of such cash creations or redemptions, transaction fees may be imposed
that will be higher than the transaction fees associated with in-kind creations
or redemptions. In all cases, such fees will be limited in accordance with the
requirements of the Securities and Exchange Commission (the "SEC") applicable to
management investment companies offering redeemable securities.

4
<PAGE>

Exchange Listing and Trading

A discussion of exchange listing and trading matters associated with an
investment in each Fund is contained in the Prospectus in the Overview and the
Shareholder Information sections. The discussion below supplements, and should
be read in conjunction with, such sections of the Prospectus.

There can be no assurance that the requirements of the listing Exchange
necessary to maintain the listing of iShares of any Fund will continue to be
met. Exchange may, but is not required to, remove the iShares of a Fund from
listing if (i) following the initial 12-month period beginning upon the
commencement of trading of a Fund, there are fewer than 50 beneficial owners of
the iShares of a Fund for 30 or more consecutive trading days; (ii) the value of
the Underlying Index on which such Fund is based is no longer calculated or
available; or (iii) such other event shall occur or condition exist that, in the
opinion of the listing Exchange, makes further dealings on the Exchange
inadvisable. The Exchange will remove the iShares of a Fund from listing and
trading upon termination of such Fund.

As in the case of other publicly-traded stocks traded, broker's commissions on
transactions will be based on negotiated commission rates at customary levels.

The following table sets forth the ratio of NAV to the Underlying Index's value
by Fund as of September 29, 2000.

<TABLE>
<CAPTION>
Ratio of
NAV/Index
Value by
iShares Index Fund Fund
------------------------------------------------------------------------------ ---------
<S> <C>
iShares Goldman Sachs Consumer Industries Index Fund 1/2
iShares Goldman Sachs Cyclical Industries Index Fund 1/1
iShares Goldman Sachs Financials Index Fund 1/2
iShares Goldman Sachs Healthcare Index Fund 1/2
iShares Goldman Sachs Natural Resources Index Fund 1/2
iShares Goldman Sachs Technology Index Fund 1/5
iShares Goldman Sachs Utilities Index Fund 1/2
iShares Russell Midcap Index Fund 1/20
iShares Russell Midcap Growth Index Fund 1/10
iShares Russell Midcap Value Index Fund 1/5
</TABLE>

The Trust reserves the right to adjust the stock prices of iShares in the future
to maintain convenient trading ranges for investors. Any adjustments would be
accomplished through stock splits or reverse stock splits, which would have no
effect on the net assets of the applicable Fund. However, the ratio of a Fund's
NAV to its Underlying Index would change in such instance.

Investment Strategies and Risks

Each Fund seeks to achieve its objective by investing in common stocks that
comprise the relevant Underlying Index. Each Fund operates as an index fund and
will not be actively managed. Adverse performance of a security in a Fund's
portfolio will ordinarily not result in the elimination of the security from a
Fund's portfolio.

Some Funds will engage in Replication, by which they hold substantially all of
the securities of the Underlying Index in approximately the same proportions as
reflected in the Underlying Index. Other Funds will engage in Representative
Sampling, which is investing in a representative sample of stocks in the
Underlying Index, selected by BGFA to have a similar investment profile as the
Underlying Index. Stocks selected have aggregate investment characteristics
(based on market capitalization and industry weightings), fundamental
characteristics (such as return variability, earnings valuation and yield) and
liquidity measures similar to those of the relevant Underlying Index. Funds that
use Representative Sampling generally do not hold all of the stocks that are
included in the relevant Underlying Index.

5
<PAGE>

<TABLE>
<CAPTION>
Funds that Use Replication Funds that Use Representative Sampling
---------------------------------------------------- ------------------------------------------------------
<S> <C>
iShares Russell Midcap Index Fund iShares Goldman Sachs Consumer Industries Index Fund
iShares Russell Midcap Growth Index Fund iShares Goldman Sachs Cyclical Industries Index Fund
iShares Russell Midcap Value Index Fund iShares Goldman Sachs Financials Index Fund
iShares Goldman Sachs Healthcare Index Fund
iShares Goldman Sachs Natural Resources Index Fund
iShares Goldman Sachs Technology Index Fund
iShares Goldman Sachs Utilities Index Fund
</TABLE>

At least 90% of each Fund's total assets will be invested in stocks in its
Underlying Index. A Fund may also invest up to 10% of its total assets in
futures, options and swap contracts (in each case related to the Underlying
Index and its component stocks), cash and cash equivalents, as well as in stocks
not included in its Underlying Index if BGFA determines this to be appropriate
in light of the Fund's investment objective and relevant investment constraints.
The following examples illustrate the circumstances in which a Fund would hold
stocks not included in its Underlying Index. First, in order to reflect various
corporate actions (such as mergers) and other changes in the Fund's Underlying
Index (reconstitutions), a Fund may hold stocks that are announced as additions
to the Underlying Index prior to their actual date of inclusion in such index.
Second, a Fund may hold stocks that have been recently deleted from its
Underlying Index due to various corporate action and reconstitutions. Third, a
Fund may invest in stocks outside the Underlying Index when necessary to meet
the diversification requirements of a regulated investment company under the
Internal Revenue Code (the "Code"). In such cases, the stocks outside the
Underlying Index will be stocks in the relevant market, market segment, market
sector or group of industries tracked by such Index.

Representative Sampling is used for those Funds where BGFA believes that
Replication is not the most effective means to track the Underlying Index. The
number of securities, liquidity of underlying securities, restrictions on the
ownership of securities, high transaction expenses and other trading costs, and
tax and other regulatory restrictions are among the factors which BGFA
considers. Although Representative Sampling has been an effective means of
approximating index performance in the past, it will not usually enable a Fund
to track the Underlying Index's performance with the accuracy achieved by
Replication. Each Fund will be reviewed regularly and adjusted, when necessary,
to correlate with the relevant Underlying Index.

Lack of Diversification of Certain Funds. The following table sets forth the
diversification status of each Fund.

<TABLE>
<CAPTION>
Diversified Funds Non-Diversified Funds
---------------------------------------------------- ------------------------------------------------------
<S> <C>
iShares Russell Midcap Index Fund iShares Goldman Sachs Consumer Industries Index Fund
iShares Russell Midcap Growth Index Fund iShares Goldman Sachs Cyclical Industries Index Fund
iShares Russell Midcap Value Index Fund iShares Goldman Sachs Financials Index Fund
iShares Goldman Sachs Healthcare Index Fund
iShares Goldman Sachs Natural Resources Index Fund
iShares Goldman Sachs Technology Index Fund
iShares Goldman Sachs Utilities Index Fund
</TABLE>

A "non-diversified" classification means that a Fund is not limited by the 1940
Act with regard to the percentage of its assets that may be invested in the
securities of a single issuer. A nondiversified Fund may also concentrate its
investments in a particular industry or group of industries, as noted in the
descriptions of such Fund. The stocks of a particular issuer, or of issuers in
particular industries, may dominate the Underlying Index of such a Fund and,
consequently, its investment portfolio. This may adversely affect its
performance or subject its iShares to greater price volatility than that
experienced by more diversified investment companies.

6
<PAGE>

Each Fund, however (whether diversified or non-diversified), intends to maintain
the required level of diversification and otherwise conduct its operations so as
to qualify as a "regulated investment company" for purposes of the Code, and to
relieve the Fund of any liability for federal income tax to the extent that its
earnings are distributed to shareholders. Compliance with the diversification
requirements of the Code severely limits the investment flexibility of certain
Funds and makes it less likely that such Funds will meet their investment
objectives.

Loans of Portfolio Securities. Each Fund may lend its investment securities to
approved borrowers. Investors Bank and Trust serves as the lending agent for the
Funds and as such, shares in any net income earned by a Fund. Any gain or loss
on the market price of the securities loaned that might occur during the term of
the loan would be for the account of the relevant Fund. These loans cannot
exceed 30% of a Fund's total assets.

Approved borrowers are brokers, dealers, domestic and foreign banks, or other
financial institutions that meet credit or other requirements as established by,
and subject to, the review of the Trust's Board of Trustees (the "Board" or the
"Trustees"), so long as the terms, the structure and the aggregate amount of
such loans are not inconsistent with the 1940 Act and the rules and regulations
thereunder or interpretations of the SEC, which require that (i) the borrowers
pledge and maintain with the Fund collateral consisting of cash, an irrevocable
letter of credit issued by a bank, or securities issued or guaranteed by the
U.S. Government having a value at all times of not less than 100% of the value
of the securities loaned (on a "mark-to-market" basis); (ii) the loan be made
subject to termination by a Fund at any time; and (iii) a Fund receives
reasonable interest on the loan. Securities lending procedures approved by the
Board will meet or exceed the requirements stated above and promulgated under
the 1940 Act. From time to time, each Fund may return a part of the interest
earned from the investment of collateral received from securities loaned to the
borrower and/or a third party that is unaffiliated with the Fund and that is
acting as a finder.

Repurchase Agreements. Each Fund may enter into repurchase agreements with banks
and securities dealers. Such transactions entail the purchase of securities with
a simultaneous commitment to resell the securities to the bank or the dealer at
an agreed-upon date and price, reflecting a market rate of interest unrelated to
the coupon rate or maturity of the purchased securities. Should a Fund enter
into a repurchase agreement, each such Fund would maintain custody of the
underlying securities prior to their repurchase. Thus, the obligation of the
bank or the dealer to pay the repurchase price on the date agreed would be, in
effect, secured by such securities. If the value of such securities were less
than the repurchase price plus interest, the other party to the agreement would
be required to provide additional collateral so that at all times the collateral
is at least 100% of the repurchase price plus accrued interest. Default by or
bankruptcy of a seller would expose each Fund to possible loss because of
adverse market action, expenses or delays in connection with the disposition of
the underlying obligations. The financial institutions with which each Fund may
enter into repurchase agreements will be banks and non-bank dealers of U.S.
Government Securities on the Federal Reserve Bank of New York's list of
reporting dealers, if such banks and non-bank dealers are deemed creditworthy by
BGFA. BGFA will continue to monitor creditworthiness of the seller under a
repurchase agreement, and will require the seller to maintain the value of the
securities subject to the agreement to equal at least 100% of the repurchase
price (including accrued interest). In addition, BGFA will require that the
value of this collateral, after transaction costs (including loss of interest)
reasonably expected to be incurred on a default, be equal to or greater than
100% of the repurchase price (including accrued premium) provided in the
repurchase agreement or the daily amortization of the difference between the
purchase price and the repurchase price specified in the repurchase agreement.
BGFA will mark-to-market daily the value of the securities. Under the 1940 Act,
repurchase agreements are considered loans.

Reverse Repurchase Agreements. Each Fund may enter into reverse repurchase
agreements, which involve the sale of securities with an agreement to repurchase
the securities at an agreed-upon price, date and interest payment and have the
characteristics of borrowing. The securities purchased with the funds obtained
from the agreement and securities collateralizing the agreement will have
maturity dates no later than the repayment date. Generally the effect of such
transactions is that the Fund can recover all or most of the cash invested in
the portfolio securities involved during the term of the reverse repurchase
agreement, while in many cases the Fund is able to keep some of the

7
<PAGE>

interest income associated with those securities. Such transactions are only
advantageous if the Fund has an opportunity to earn a greater rate of interest
on the cash derived from these transactions than the interest cost of obtaining
the same amount of cash. Opportunities to realize earnings from the use of the
proceeds equal to or greater than the interest required to be paid may not
always be available and each Fund intends to use the reverse repurchase
technique only when BGFA believes it will be advantageous to the Fund. The use
of reverse repurchase agreements may exaggerate any interim increase or decrease
in the value of each Fund's assets. The custodian bank will maintain a separate
account for each Fund with securities having a value equal to or greater than
such commitments. Under the 1940 Act, reverse repurchase agreements are
considered loans.

Currency Transactions. No Fund expects to engage in currency transactions for
the purpose of hedging against declines in the value of the Fund's currency. A
Fund may enter into foreign currency forward and foreign currency futures
contracts to facilitate local securities settlements or to protect against
currency exposure in connection with its distributions to shareholders, but may
not enter into such contracts for speculative purposes.

A forward currency contract is an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. A currency futures contract is a contract involving an obligation to
deliver or acquire the specified amount of a specific currency, at a specified
price and at a specified future time. Futures contracts may be settled on a net
cash payment basis rather than by the sale and delivery of the underlying
currency.

Foreign exchange transactions involve a significant degree of risk and the
markets in which foreign exchange transactions are effected are highly volatile,
highly specialized and highly technical. Significant changes, including changes
in liquidity prices, can occur in such markets within very short periods of
time, often within minutes. Foreign exchange trading risks include, but are not
limited to, exchange rate risk, maturity gap, interest rate risk, and potential
interference by foreign governments through regulation of local exchange
markets, foreign investment or particular transactions in foreign currency. If
BGFA utilizes foreign exchange transactions at an inappropriate time or judges
market conditions, trends or correlations incorrectly, foreign exchange
transactions may not serve their intended purpose of improving the correlation
of a Fund's return with the performance of the Underlying Index and may lower
the Fund's return. The Fund could experience losses if the value of its currency
forwards, options and futures positions were poorly correlated with its other
investments or if it could not close out its positions because of an illiquid
market. In addition, each Fund could incur transaction costs, including trading
commissions, in connection with certain foreign currency transactions.

Money Market Instruments. Each Fund may invest a portion of its assets in high-
quality money market instruments on an ongoing basis to provide liquidity. The
instruments in which the Fund may invest include: (i) short-term obligations
issued by the U.S. Government; (ii) negotiable certificates of deposit ("CDs"),
fixed time deposits and bankers' acceptances of U.S. and foreign banks and
similar institutions; (iii) commercial paper rated at the date of purchase
"Prime-1" by Moody's or "A-1+" or "A-1" by S&P or, if unrated, of comparable
quality is determined by BGFA; and (iv) repurchase agreements. CDs are short-
term negotiable obligations of commercial banks. Time deposits are non-
negotiable deposits maintained in banking institutions for specified periods of
time at stated interest rates. Banker's acceptances are time drafts drawn on
commercial banks by borrowers, usually in connection with international
transactions.

Foreign Securities. Each Fund may purchase publicly traded common stocks of
foreign corporations represented in the Underlying Indices. Each Fund's
investment in common stock of foreign corporations represented in the Underlying
Indices may also be in the form of American Depositary Receipts ("ADRs") and
Global Depositary Receipts ("GDRs"). ADRs and GDRs are receipts, typically
issued by a bank or trust company, which evidence ownership of underlying
securities issued by a foreign corporation.

8
<PAGE>

Investing in the securities of foreign companies involves special risks and
considerations not typically associated with investing in U.S. companies. These
include differences in accounting, auditing and financial reporting standards,
the possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations, political instability which could
affect U.S. investments in foreign countries, and potential restrictions of the
flow of international capital. Foreign companies may be subject to less
governmental regulation than U.S. companies. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross domestic product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payment positions.

Investment Companies, REITs. Each Fund may invest in the securities of other
investment companies (including money market funds) and real estate investment
trusts to the extent allowed by law. Under the 1940 Act, each Fund's investment
in investment companies is limited to, subject to certain exceptions, (i) 3% of
the total outstanding voting stock of any one investment company, (ii) 5% of the
Fund's total assets with respect to any one investment company and (iii) 10% of
the Fund's total assets of investment companies in the aggregate.

Illiquid Securities. Each Fund may invest up to an aggregate amount of 15% of
its net assets in illiquid securities. Illiquid securities include securities
subject to contractual or other restrictions on resale and other instruments
that lack readily available markets.

Futures and Options. Each Fund may enter into U.S. or foreign futures contracts,
options and options on futures contracts. These futures contracts and options
will be used to simulate full investment in the respective Underlying Index, to
facilitate trading or to reduce transaction costs. Each Fund will only enter
into futures contracts and options on futures contracts that are traded on a
U.S. or foreign exchange. No Fund will use futures or options for speculative
purposes.

A call option gives a holder the right to purchase a specific security at a
specified price ("exercise price") within a specified period of time. A put
option gives a holder the right to sell a specific security at a specified price
within a specified period of time. The initial purchaser of a call option pays
the "writer" a premium, which is paid at the time of purchase and is retained by
the writer whether or not such option is exercised. Each Fund may purchase put
options to hedge its portfolio against the risk of a decline in the market value
of securities held and may purchase call options to hedge against an increase in
the price of securities it is committed to purchase. Each Fund may write put and
call options along with a long position in options to increase its ability to
hedge against a change in the market value of the securities it holds or is
committed to purchase.

Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific instrument or index at a
specified future time and at a specified price. Stock index contracts are based
on indices that reflect the market value of common stock of the firms included
in the indices. Each Fund may enter into futures contracts to purchase security
indices when BGFA anticipates purchasing the underlying securities and believes
prices will rise before the purchase will be made. Assets committed to futures
contracts will be segregated by the custodian to the extent required by law.

Options on Futures Contracts. An option on a futures contract, as contrasted
with the direct investment in such a contract, gives the purchaser the right, in
return for the premium paid, to assume a position in the underlying futures
contract at a specified exercise price at any time prior to the expiration date
of the option. Upon exercise of an option, the delivery of the futures position
by the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's futures margin account that
represents the amount by which the market price of the futures contract exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the futures contract. The potential for loss related to
the purchase of an option on a futures contract is limited to the premium paid
for the option plus transaction costs. Because the value of the option is fixed
at the point of sale, there are no daily cash payments by the purchaser to
reflect changes in the value of the

9
<PAGE>

underlying contract; however, the value of the option changes daily and that
change would be reflected in the NAV of each Fund. The potential for loss
related to writing options is unlimited.

Each Fund may purchase and write put and call options on futures contracts that
are traded on a U.S. or foreign exchange as a hedge against changes in value of
its portfolio securities, or in anticipation of the purchase of securities, and
may enter into closing transactions with respect to such options to terminate
existing positions. There is no guarantee that such closing transactions can be
effected.

Restrictions on the Use of Futures Contracts and Options on Futures Contracts.
In view of the above considerations, each Fund will comply with the following
restriction when purchasing or selling futures. Aggregate initial margin and
premiums that are required to establish positions other than those considered to
be "bona fide hedging" by the Commodity Futures Trading Commission (the "CFTC")
will not exceed 5% of each Fund's total market value after taking into account
unrealized profits and unrealized losses on any such contracts it has entered
into. In addition, each Fund will not purchase options to the extent that more
than 5% of the value of such Fund's total assets would be invested in premiums
on open put option positions.

Upon entering into a futures contract, a Fund will be required to deposit with
the broker an amount of cash or cash equivalents in the range of approximately
5% to 7% of the contract amount (this amount is subject to change by the
exchange on which the contract is traded). This amount, known as "initial
margin", is in the nature of a performance bond or good faith deposit on the
contract and is returned to each Fund upon termination of the futures contract,
assuming all contractual obligations have been satisfied. Subsequent payments,
known as "variation margin", to and from the broker will be made daily as the
price of the index underlying the futures contract fluctuates, making the long
and short positions in the futures contract more or less valuable, a process
known as "marking-to-market." At any time prior to expiration of a futures
contract, each Fund may elect to close the position by taking an opposite
position, which will operate to terminate the Fund's existing position in the
contract.

Swap Agreements. Swap agreements are contracts between parties in which one
party agrees to make periodic payments to the other party based on the change in
market value or level of a specified rate, index or asset. In return, the other
party agrees to make periodic payments to the first party based on the return of
a different specified rate, index or asset. Swap agreements will usually be done
on a net basis, the Fund receiving or paying, only the net amount of the two
payments. The net amount of the excess, if any, of a Fund's obligations over its
entitlements with respect to each swap is accrued on a daily basis and an amount
of cash or high liquid securities having an aggregate value at least equal to
the accrued excess is maintained in an account at the Trust's custodian bank.

The use of interest-rate and index swaps is a highly specialized activity that
involves investment techniques and risks different from those associated with
ordinary portfolio security transactions. These transactions generally do not
involve the delivery of securities or other underlying assets or principal.

Future Developments. The Board may, in the future, authorize each Fund to invest
in securities contracts and investments other than those listed in this
Statement of Additional Information and in the Prospectus, provided they are
consistent with each Fund's investment objective and do not violate any
investment restrictions or policies.

General Considerations and Risks. A discussion of the risks associated with an
investment in a Fund is contained in the Prospectus in the Principal Risk
Factors Common to All Funds and the Shareholder Information sections. The
discussion below supplements, and should be read in conjunction with, these
sections of the Prospectus.

An investment in a Fund should be made with an understanding that the value of a
Fund's portfolio securities may fluctuate in accordance with changes in the
financial condition of the issuers of the portfolio securities, the value of
common stocks in general and other factors that affect the market.

10
<PAGE>

An investment in a Fund should also be made with an understanding of the risks
inherent in an investment in equity securities, including the risk that the
financial condition of issuers may become impaired or that the general condition
of the stock market may deteriorate (either of which may cause a decrease in the
value of the portfolio securities and thus in the value of iShares). Common
stocks are susceptible to general stock market fluctuations and to volatile
increases and decreases in value as market confidence and perceptions of their
issuers change. These investor perceptions are based on various and
unpredictable factors, including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.

Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the issuer, have
generally inferior rights to receive payments from the issuer in comparison with
the rights of creditors, or holders of debt obligations or preferred stocks.
Further, unlike debt securities which typically have a stated principal amount
payable at maturity (whose value, however, is subject to market fluctuations
prior thereto), or preferred stocks, which typically have a liquidation
preference and which may have stated optional or mandatory redemption
provisions, common stocks have neither a fixed principal amount nor a maturity.
Common stock values are subject to market fluctuations as long as the common
stock remains outstanding.

Although most of the securities in the Underlying Indices are listed on a
national securities exchange, the principal trading market for some may be in
the over-the-counter market. The existence of a liquid trading market for
certain securities may depend on whether dealers will make a market in such
securities. There can be no assurance that a market will be made or maintained
or that any such market will be or remain liquid. The price at which securities
may be sold and the value of a Fund's iShares will be adversely affected if
trading markets for a Fund's portfolio securities are limited or absent, or if
bid/ask spreads are wide.

Risks of Futures and Options Transactions. There are several risks accompanying
the utilization of futures contracts and options on futures contracts. First, a
position in futures contracts and options on futures contracts may be closed
only on the exchange on which the contract was made (or a linked exchange).
While each Fund plans to utilize futures contracts only if an active market
exists for such contracts, there is no guarantee that a liquid market will exist
for the contract at a specified time. Furthermore, because, by definition,
futures contracts project price levels in the future and not current levels of
valuation, market circumstances may result in a discrepancy between the price of
the stock index future and the movement in the underlying Index. In the event of
adverse price movements, a Fund would continue to be required to make daily cash
payments to maintain its required margin. In such situations, if a Fund has
insufficient cash, it may have to sell portfolio securities to meet daily margin
requirements at a time when it may be disadvantageous to do so. In addition, a
Fund may be required to deliver the instruments underlying future contracts it
has sold.

The risk of loss in trading futures contracts or uncovered call options in some
strategies (e.g., selling uncovered stock index futures contracts) is
potentially unlimited. The Funds do not plan to use futures and options
contracts in this way. The risk of a futures position may still be large as
traditionally measured due to the low margin deposits required. In many cases, a
relatively small price movement in a futures contract may result in immediate
and substantial loss or gain to the investor relative to the size of a required
margin deposit. The Funds, however, intend to utilize futures and options
contracts in a manner designed to limit their risk exposure to levels comparable
to direct investment in stocks.

Utilization of futures and options on futures by a Fund involves the risk of
imperfect or even negative correlation to the Underlying Index if the index
underlying the futures contract differs from the Underlying Index. There is also
the risk of loss by a Fund of margin deposits in the event of bankruptcy of a
broker with whom a Fund has an open position in the futures contract or option.
The purchase of put or call options will be based upon predictions by BGFA as to
anticipated trends, which predictions could prove to be incorrect.

11
<PAGE>

Because the futures market imposes less burdensome margin requirements than the
securities market, an increased amount of participation by speculators in the
futures market could result in price fluctuations. Certain financial futures
exchanges limit the amount of fluctuation permitted in futures contract prices
during a single trading day. The daily limit establishes the maximum amount by
which the price of a futures contract may vary either up or down from the
previous day's settlement price at the end of a trading session. Once the daily
limit has been reached in a particular type of contract, no trades may be made
on that day at a price beyond that limit. It is possible that futures contract
prices could move to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures positions
and subjecting each Fund to substantial losses. In the event of adverse price
movements, each Fund would be required to make daily cash payments of variation
margin.

Although each Fund intends to enter into futures contracts only if there is an
active market for such contracts, there is no assurance that an active market
will exist for the contracts at any particular time.

Risks of Swap Agreements. The risk of loss with respect to swaps generally is
limited to the net amount of payments that a Fund is contractually obligated to
make. Swap agreements are subject to the risk that the swap counterparty will
default on its obligations. If such a default occurs, a Fund will have
contractual remedies pursuant to the agreements related to the transaction.
However, such remedies may be subject to bankruptcy and insolvency laws which
could affect such Fund's rights as a creditor -- e.g. a Fund may not receive the
net amount of payments that it contractually is entitled to receive.

Construction and Maintenance Standards for the Underlying Indices

Index Dissemination. The Listing Exchange intends to disseminate every fifteen
seconds the approximate value of the iShares of each Fund. This approximate
value should not be viewed as a "real-time" update of the NAV per iShare of a
Fund, because it may not be calculated in the same manner as the NAV, which is
computed once a day. The Funds are not involved in, or responsible for, the
calculation or dissemination of such amount and make no warranty as to its
accuracy.

Brief descriptions of the Underlying Indices on which the Funds are based and
the equity markets in which the Funds are invested are provided below.

The Goldman Sachs Sector Indices Generally

Component Selection Criteria. The starting universe for eligible constituents of
the Goldman Sachs Sector Indices are companies with Standard Industrial
Classifications or Russell Codes that have been mapped to each of the sectors
represented by these Indices. The stock of each consituent company must trade on
either the NYSE, the AMEX or on NASDAQ. Foreign companies trading on such
exchanges are also eligible for inclusion in a Goldman Sachs Sector Index.
Certain ADRs that have been a traditional part of the portfolios of U.S.
institutional investors are also eligible. REITs, Limited Partnerships, and
closed-end funds are excluded. The total market capitalization of a stock
eligible for inclusion must be equal or greater than the market capitalization
limit as of the most recent rebalancing. Companies with float (i.e., holdings in
excess of 10% by an individual, corporation or family trust) below 20% are not
eligible. The annualized turnover of company shares on the relevant exchange(s)
must be 30% or more to further ensure adequate liquidity.

12
<PAGE>

Each index is initially capitalization weighted, based on the following formula:
number of outstanding shares of a constituent multiplied by its share price as
of the index's inception or rebalancing date. Weights are then modified so that
none exceeds a predetermined limit. If the combined weight of the nine largest
stocks exceeds 45%, the weights of each such stock is reduced by increments of
0.5% until the combined weight is less than 45%.

Issue Changes. Each Goldman Sachs Sector Index is rebalanced semiannually on the
third Friday of July and January. The total market capitalization for stocks to
be added to the index must be equal to or greater than the capitalization limit
at inception of the index or as of the most recent semiannual rebalancing date.
A company's total market capitalization shall be based on the number of its
outstanding shares and its closing price on its primary exchange as of inception
or the rebalancing date. The market capitalization limit for each index will be
determined at index inception and will be periodically revised to reflect
changes in market levels. Index constituents with capitalization below 50% of
the limit as on a rebalancing date shall be removed after the close on the
effective date of the rebalancing. Changes to a company's shares outstanding
that are greater than 5% will be applied to the index when they are effective.
Changes that are less than 5% will be applied to the index at next regularly
scheduled rebalancing.

Index Maintenance. Each index is adjusted to reflect company additions and
deletions, share changes, stock splits, stock dividends, and stock price
adjustments due to restructurings and spin-offs. For changes of 5% or more in a
company's number of shares outstanding that result from a merger, acquisition or
spin-off, the index is adjusted upon the close of the consummation of such
transaction. For share changes of 5% or more that result from the issuance or
repurchase or common shares, the index is adjusted upon the confirmation of such
issuance or repurchase. If a constituent company spins off a company, the parent
and the spin-off will each remain in the index as long as they each satisfy the
component selection criteria described above, except with respect to the 30%
turnover requirement. In the event that a constituent company files for
bankruptcy, its stock will be removed from the index effective the close of that
date.

Index Availability. The Goldman Sachs Sector Indices are calculated continuously
and are available from major data vendors.

Goldman Sachs Consumer Industries Sector Index
Number of Components: approximately 289

Index Description. The Goldman Sachs Consumer Sector Index has been developed by
Goldman Sachs as an equity benchmark for U.S.-traded consumer-related stocks.
The Index includes companies in the following categories: producers/retailers of
food and beverages, drug retailers, providers of entertainment and leisure
facilities, lodging, accommodations, restaurants and pubs, and providers of
business services. It is a modified capitalization-weighted index: the
constituent stocks are weighted according to the total market value of their
outstanding shares, except that no constituent is weighted in excess of a
predetermined limit and the combined weights of the nine largest constituents
cannot exceed 45%. In this way, the impact of a component's price change on the
Index is generally proportional to the issue's total market value. The Index
value is calculated by summing up the weight-adjusted market capitalizations for
all constituent stocks and dividing that sum by a predetermined base value. The
index was introduced in July 1998 with a base value of 100 as of April 30, 1998
and a capitalization weighting limit of 7.5% as of the most recent rebalancing
date. The value of the Index is adjusted to reflect changes in capitalization
resulting from mergers, acquisitions, stock rights, substitutions and other
capital events. As of September 29, 2000, the ten largest companies in the Index
were Wal Mart Stores Inc., Coca Cola Co., Home Depot Inc., Time Warner Inc.,
Procter & Gamble Co., Viacom Inc., Walt Disney Co., Philip Morris Companies
Inc., Pepsico Inc. and AT&T Corp.

13
<PAGE>

Goldman Sachs Cyclical Industries Sector Index
Number of Components: approximately 250

Index Description. The Goldman Sachs Cyclical Sector Index has been developed by
Goldman Sachs as an equity benchmark for U.S.-traded cyclical stocks. The Index
includes companies in the following categories: providers of consumer and
commercial goods and services where performance is influenced by economic
cycles, auto manufacturers, construction companies, chemical producers,
providers of environmental services, manufacturers of machinery, commercial
vehicles and packaging containers, and providers of transportation services. It
is a modified capitalization-weighted index: the constituent stocks are weighted
according to the total market value of their outstanding shares, except that no
constituent is weighted in excess of a predetermined limit and the combined
weight of the nine largest constituents cannot exceed 45%. In this way, the
impact of a component's price change on the Index is generally proportional to
the issue's total market value. The Index value is calculated by summing up the
weight-adjusted market capitalizations for all constituent stocks and dividing
that sum by a predetermined base value. The index was introduced in July 1998
with a base value of 100 as of April 30, 1998 and a capitalization weighting
limit of 7.5% as of the most recent rebalancing date. The value of the Index is
adjusted to reflect changes in capitalization resulting from mergers,
acquisitions, stock rights, substitutions and other capital events. As of
September 29, 2000, the ten largest companies in the Index were General Electric
Co., Tyco International Ltd., Boeing Co., Ford Motor Co., DaimlerChrysler AG, Du
Pont E I De Nemours & Co., General Motors Corp., Minnesota Managing &
Manufacturing Co., United Technologies Corp. and Emerson Electric Co.

Goldman Sachs Financials Sector Index
Number of Components: approximately 255

Index Description. The Goldman Sachs Financial Sector Index has been developed
by Goldman Sachs as an equity benchmark for U.S.-traded financial stocks. The
Index includes companies in the following categories: banking services,
commercial and consumer finance services, brokerage firms and asset managers,
insurance companies, and real estate companies. It is a modified capitalization-
weighted index: the constituent stocks are weighted according to the total
market value of their outstanding shares, except that no constituent is weighted
in excess of a predetermined limit and the combined weight of the nine largest
constituents cannot exceed 45%. In this way, the impact of a component's price
change on the Index is generally proportional to the issue's total market value.
The Index value is calculated by summing up the weight-adjusted market
capitalizations for all constituent stocks and dividing that sum by a
predetermined weighting limit of 5.0% as of the most recent rebalancing date.
The value of the Index is adjusted to reflect changes in capitalization
resulting from mergers, acquisitions, stock rights, substitutions and other
capital events. As of September 29, 2000, the ten largest companies in the Index
were American International Group Inc., Citigroup Inc., Morgan Stanley Dean
Witter & Co., Bank America Corp., Berkshire Hathaway Inc., American Express Co.,
Wells Fargo & Co., Federal National Mortgage Assn., Chase Manhattan Corp. and
Goldman Sachs Group Inc.

Goldman Sachs Healthcare Sector Index
Number of Components: approximately 119

Index Description. The Goldman Sachs Healthcare Sector Index has been developed
by Goldman Sachs as an equity benchmark for U.S.-traded healthcare-related
stocks. The Index includes companies in the following categories: providers of
healthcare related services, researchers, manufacturers, and distributors of
pharmaceuticals, drugs and related sciences, and medical supplies, instruments
and products. It is a modified capitalization-weighted index: the constituent
stocks are weighted according to the total market value of their outstanding
shares, except that no constituent is weighted in excess of a predetermined
limit and the combined weight of the nine largest constituents cannot exceed
45%. In this way, the impact of a component's price change on the Index is
generally proportional to

14
<PAGE>

the issue's total market value. The Index value is calculated by summing up the
weight-adjusted market capitalizations for all constituent stocks and dividing
that sum by a predetermined base value. The index was introduced in July 1998
with a base value of 100 as of April 30, 1998 and a capitalization weighting
limit of 7.5% as of the most recent rebalancing date. The value of the Index is
adjusted to reflect changes in capitalization resulting from mergers,
acquisitions, stock rights, substitutions and other capital events. As of
September 29, 2000, the ten largest companies in the Index were Merck & Co.
Inc., Johnson & Johnson, Bristol Myers Squibb Co., Pfizer Inc., Lilly Eli & Co.,
Pharmacia Corp., American Home Products Corp., Abbott Laboratories, Amgen Inc.
and Schering Plough Corp.

Goldman Sachs Natural Resources Sector Index
Number of Components: approximately 110

Index Description. The Goldman Sachs Natural Resources Sector Index has been
developed by Goldman Sachs as an equity benchmark for U.S.-traded natural
resource-related stocks. The Index includes companies in the following
categories: extractive industries, energy companies, owners and operators of
timber tracts, forestry services, producers of pulp and paper, and owners of
plantations. It is a modified capitalization-weighted index: the constituent
stocks are weighted according to the total market value of their outstanding
shares, except that no constituent is weighted in excess of a predetermined
limit and the combined weight of the nine largest constituents cannot exceed
45%. In this way, the impact of a component's price change on the Index is
generally proportional to the issue's total market value. The Index value is
calculated by summing up the weight-adjusted market capitalizations for all
constituent stocks and dividing that sum by a predetermined base value. The
index was introduced in July 1998 with a base value of 100 as of April 30, 1998
and a capitalization weighting limit of 7.5% as of the most recent rebalancing
date. The value of the Index is adjusted to reflect changes in capitalization
resulting from mergers, acquisitions, stock rights, substitutions and other
capital events. As of September 29, 2000, the ten largest companies in the Index
were Exxon Mobil Corp., Enron Corp., Royal Dutch Pete Co., BP Amoco PLC, Chevron
Corp., Schlumberger Ltd., Texaco Inc., Alcoa Inc., Halliburton Co. and Williams
Companies Inc.

Goldman Sachs Technology Sector Index
Number of Components: approximately 219

Index Description. The Goldman Sachs Technology Sector Index has been developed
by Goldman Sachs as an equity benchmark for U.S.-traded technology-related
stocks. The Index includes companies in the following categories: producers of
sophisticated computer-related devices; electronics networking and Internet
services; producers of Internet software; consultants for information technology
and providers of computer services. It is a modified capitalization-weighted
index: the constituent stocks are weighted according to the total market value
of their outstanding shares, except that no constituent is weighted in excess of
a predetermined limit and the combined weight of the nine largest constituents
cannot exceed 45%. In this way, the impact of a component's price change on the
Index is generally proportional to the issue's total market value. The Index
value is calculated by summing up the weight-adjusted market capitalizations for
all constituent stocks and dividing that sum by a predetermined base value. The
index was introduced in July 1998 with a base value of 100 as of April 30, 1998
and a capitalization weighting limit of 7.5% as of the most recent rebalancing
date. The value of the Index is adjusted to reflect changes in capitalization
resulting from mergers, acquisitions, stock rights, substitutions and other
capital events. As of September 29, 2000, the ten largest companies in the Index
were Cisco Systems Inc., Microsoft Corp., Intel Corp., Oracle Corp., EMC Corp.,
International Business Machines Corp., Sun Microsystems, Nortel Networks Corp.,
America Online Inc. and Lucent Technologies Inc.

15
<PAGE>

Goldman Sachs Utilities Sector Index
Number of Components: approximately 137

Index Description. The Goldman Sachs Utilities Sector Index has been developed
by Goldman Sachs as an equity benchmark for U.S.-traded utility-related stocks.
The Index includes companies in the following categories: generators and
distributors of electricity, distributors of natural gas and water, and
providers of telecommunications services, both fixed line networks and
wireless/mobile networks. It is a modified capitalization-weighted index: the
constituent stocks are weighted according to the total market value of their
outstanding shares, except that no constituent is weighted in excess of a
predetermined limit and the combined weight of the nine largest constituents
cannot exceed 45%. In this way, the impact of a component's price change on the
Index is generally proportional to the issue's total market value. The Index
value is calculated by summing up the weight-adjusted market capitalizations for
all constituent stocks and dividing that sum by a predetermined base value. The
index was introduced in July 1998 with a base value of 100 as of April 30, 1998
and a capitalization weighting limit of 7.5% as of the most recent rebalancing
date. The value of the Index is adjusted to reflect changes in capitalization
resulting from mergers, acquisitions, stock rights, substitutions and other
capital events. As of September 29, 2000, the ten largest companies in the Index
were SBC Communications Inc., Verizon Communications, AT&T Corp., Qwest
Communications International, Bellsouth Corp., Worldcom Inc., Nextel
Communications Inc., General Motors Class H -- Hughes Electronics, Sprint Corp.
and Duke Energy Corp.

The Russell Indices Generally

Component Selection Criteria. The Russell Indices are reconstituted annually
on March 31, to reflect changes in the marketplace. The starting universe for
the Russell 3000 Index, all U.S. exchange and OTC listed companies, is ranked by
decreasing total market capitalization. The Russell 2000 Index and the Russell
1000 Index are subsets of the Russell 3000 Index. The Russell Midcap Index is a
subset of the Russell 1000. All companies listed on a U.S. exchange or the OTC
are considered for inclusion in the indices with the following rules and
exceptions. Stocks must trade at or above $1.00 on May 31 to be eligible for
inclusion. Only one class of security is allowed into the indices, however,
special cases may exist if it is determined that each class acts independent of
the other. Stocks domiciled in other countries are excluded. Also excluded are
preferred and convertible preferred stock, participating preferred stock,
redeemable shares, warrants and rights, trust receipts, royalty trusts, limited
liability companies, OTC bulletin boards and pink sheet stocks, mutual funds,
limited partnerships, and foreign stocks. After component selection, stocks are
weighted by their available market capitalization, which is calculated by
multiplying the composite closing price by the adjusted shares. The purpose of
this adjustment is to exclude the capitalization that is not available for
purchase and is not part of the investing opportunity set.

Issue Changes. Securities that leave the Russell Indices between
reconstitution dates are not replaced. Thus, the number of securities in the
indices over the year will fluctuate according to corporate activity. When a
stock is acquired, delisted, or moves to the pink sheets or OTC bulletin boards,
the stock is deleted from the relevant indices. When acquisitions or mergers
take place, the stock's capitalization moves to the acquiring stock, hence,
mergers have no effect on index total capitalization if the acquiring stock is
part of the index. The only additions between reconstitution dates are as a
result of spin-offs.

Index Maintenance. Maintaining the Russell Indices includes monitoring and
completing the adjustments for company additions and deletions, share changes,
stock splits, stock dividends, and stock price adjustments due to restructuring
and spin-offs. In addition, significant float adjustments due to corporate
actions are made month-end. The divisor is adjusted for all changes in company
market value to leave the value of the indices unaffected. All divisor
adjustments are made after the close of trading and after the calculation of the
closing value of the Russell Indices.

16
<PAGE>

Russell Midcap Index
Number of Components: approximately 782

Index Description. The Russell Midcap Index is a capitalization-weighted index
consisting of approximately the 800 smallest companies in the Russell 1000
Index. The Russell Midcap Index represents approximately 19% of the market
capitalization of listed U.S. equities. As in all Russell indexes, component
companies are adjusted for available float - weighted according to the market
value of their available outstanding shares. The impact of a component's price
change is proportional to the issue's total market value, which is the share
price times the number of shares outstanding. These are summed for all component
stocks and divided by a predetermined base value. The base value for the Index
is adjusted to reflect changes in capitalization resulting from mergers,
acquisitions, stock rights, substitutions and other capital events. The Russell
MidCap Index represents approximately 19% of the market capitalization of listed
U.S. equities and is a widely used benchmark of the U.S. mid cap equity market.
As of September 29, 2000, the ten largest companies in the Index were Palm Inc.,
Brocade Communications Systems Inc., PE Corp. - PE Biosystems Group, Ariba Inc.,
Applied Micro Circuits Corp., Providian Financial Corporation, Lehman Brothers
Holdings Inc., Redback Networks, Hartford Financial Services Group and Medimmune
Inc.

Russell Midcap Growth Index
Number of Components: approximately 404

Index Description. The Russell Midcap Growth Index is a capitalization-weighted
index that measures the performance of the mid-capitalization growth sector of
the U.S. equity market. It is a subset of the Russell Midcap Index,
representing approximately 50% of the total market capitalization of the Russell
Midcap Index. The Index measures the performance of those Russell Midcap Index
companies with higher price-to-book ratios and higher forecasted growth. As in
all Russell indexes, component companies are adjusted for available float -
weighted according to the market value of their available outstanding shares.
The impact of a component's price change is proportional to the issue's total
market value, which is the share price times the number of shares outstanding.
These are summed for all component stocks and divided by a predetermined base
value. The base value for the Index is adjusted to reflect changes in
capitalization resulting from mergers, acquisitions, stock rights, substitutions
and other capital events. As of September 29, 2000, the ten largest companies in
the Index were Palm Inc., Brocade Communications Systems Inc., PE Corp - PE
Biosystems Group, Ariba Inc., Applied Micro Circuits Corp., Providian Financial
Corporation., Redback Networks, Medimmune Inc., Vitesse Semiconductor Corp. and
Commerce One Inc.

Russell Midcap Value Index
Number of Components: approximately 606

Index Description. The Russell Midcap Value Index is a capitalization-weighted
index that measures the performance of the mid-capitalization value sector of
the U.S. equity market. It is a subset of the Russell Midcap Index,
representing approximately 50% of the total market capitalization of the Russell
Midcap Index. The Index measures the performance of those Russell Midcap Index
companies with lower price-to-book ratios and lower forecasted growth. As in all
Russell indexes, component companies are adjusted for available float - weighted
according to the market value of their available outstanding shares. The impact
of a component's price change is proportional to the issue's total market value,
which is the share price times the number of shares outstanding. These are
summed for all component stocks and divided by a predetermined base value. The
base value for the Index is adjusted to reflect changes in capitalization
resulting from mergers, acquisitions, stock rights, substitutions and other
capital events. As of September 29, 2000, the ten largest companies in the Index
were Lehman Brothers Holdings Inc., Hartford Financial Services Group,
UnitedHealth Group Inc., Chubb Corp., Dominion Res Inc., National City Corp., El
Paso Energy Corp., Fedex Corporation, American Electric Power Inc. and McGraw
Hill Companies Inc.

17
<PAGE>

Investment Limitations

The Board has adopted as fundamental policies each Fund's investment objectives
and investment restrictions, numbered one through six below. These restrictions
cannot be changed with respect to a Fund without the approval of the holders of
a majority of such Fund's outstanding voting securities. A vote of a majority of
the outstanding voting securities is defined in the 1940 Act as the lesser of
(a) 67% or more of the voting securities present at a fund meeting, if the
holders of more than 50% of the outstanding voting securities are present or
represented by proxy, or (b) more than 50% of outstanding voting securities.

No Fund will:

1. Concentrate its investments (i.e. hold 25% or more of its total assets in
the stocks of a particular industry or group of industries), except that a Fund
will concentrate to approximately the same extent that its Underlying Index
concentrates in the stocks of such particular industry or group of industries.
For purposes of this limitation, securities of the U.S. Government (including
its agencies and instrumentalities), repurchase agreements collateralized by
U.S. Government securities, and securities of state or municipal governments and
their political subdivisions are not considered to be issued by members of any
industry.

2. Borrow money, except that (i) each Fund may borrow from banks for temporary
or emergency (not leveraging) purposes, including the meeting of redemption
requests which might otherwise require the untimely disposition of securities,
and (ii) each Fund may, to the extent consistent with its investment policies,
enter into repurchase agreements, reverse repurchase agreements, forward roll
transactions and similar investment strategies and techniques. To the extent
that it engages in transactions described in (i) and (ii), each Fund will be
limited so that no more than 30% of the value of its total assets (including the
amount borrowed) valued at the time the borrowing is made, is derived from such
transactions.

3. Issue "senior securities" as defined in the 1940 Act and the rules,
regulations and orders thereunder, except as permitted under the 1940 Act and
the rules, regulations and orders thereunder.

4. Make loans. This restriction does not apply to: (i) the purchase of debt
obligations in which each Fund may invest consistent with its investment
objectives and policies; (ii) repurchase agreements and reverse repurchase
agreements; and (iii) loans of its portfolio securities, to the fullest extent
permitted under the 1940 Act.

5. Purchase or sell real estate, real estate mortgages, commodities or
commodity contracts, but this restriction shall not prevent each Fund from
trading in futures contracts and options on futures contracts (including options
on currencies to the extent consistent with each Fund's investment objective and
policies).

6. Engage in the business of underwriting securities issued by other persons,
except to the extent that each Fund may technically be deemed to be an
underwriter under the Securities Act of 1933, as amended (the "Securities Act"),
in disposing of portfolio securities.

In addition to the investment restrictions adopted as fundamental policies, set
forth above, each Fund will not invest in the securities of a company for the
purpose of exercising management or control or purchase or otherwise acquire any
illiquid security, except as permitted under the 1940 Act, which currently
permits up to 15% of each Fund's net assets to be invested in illiquid
securities.

For purposes of the percentage limitation on each Fund's investments in illiquid
securities, foreign equity securities, though not registered under the
Securities Act of 1933, are not deemed illiquid with respect to each Fund if
they are otherwise readily marketable. Such securities ordinarily are considered
to be "readily marketable" if they are traded

18
<PAGE>

on an exchange or another organized market and are not legally restricted from
sale by the Fund. BGFA monitors the liquidity of restricted securities in each
Fund's portfolio. In reaching liquidity decisions, BGFA considers the following
factors:

. The frequency of trades and quotes for the security;

. The number of dealers wishing to purchase or sell the security and the number
of other potential purchasers;

. Dealer undertakings to make a market in the security; and

. The nature of the security and the nature of the marketplace in which it
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer).

If any percentage restriction described above is complied with at the time of an
investment, a later increase or decrease in percentage resulting from a change
in values of assets will not constitute a violation of such restriction.

Continuous Offering

The method by which Creation Unit Aggregations of iShares are created and traded
may raise certain issues under applicable securities laws. Because new Creation
Unit Aggregations of iShares are issued and sold by the Funds on an ongoing
basis, at any point a "distribution", as such term is used in the Securities
Act, may occur. Broker-dealers and other persons are cautioned that some
activities on their part may, depending on the circumstances, result in their
being deemed participants in a distribution in a manner which could render them
statutory underwriters and subject them to the prospectus-delivery requirement
and liability provisions of the Securities Act.

For example, a broker-dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Unit Aggregations after placing an order with
the Distributor, breaks them down into constituent iShares, and sells such
iShares directly to customers, or if it chooses to couple the creation of a
supply of new iShares with an active selling effort involving solicitation of
secondary market demand for iShares. A determination of whether one is an
underwriter for purposes of the Securities Act must take into account all the
facts and circumstances pertaining to the activities of the broker-dealer or its
client in the particular case, and the examples mentioned above should not be
considered a complete description of all the activities that could lead to a
categorization as an underwriter.

Broker-dealer firms should also note that dealers who are not "underwriters" but
are effecting transactions in iShares, whether or not participating in the
distribution of iShares, are generally required to deliver a prospectus. This is
because the prospectus delivery exemption in Section 4(3) of the Securities Act
is not available in respect of such transactions as a result of Section 24(d) of
the 1940 Act. Firms that incur a prospectus-delivery obligation with respect to
iShares are reminded that, under the Securities Act Rule 153, a prospectus-
delivery obligation under Section 5(b)(2) of the Securities Act owed to an
exchange member in connection with a sale on the Listing Exchange is satisfied
by the fact that the prospectus is available at the Listing Exchange upon
request. The prospectus delivery mechanism provided in Rule 153 is only
available with respect to transactions on an exchange.

Management

The following information supplements and should be read in conjunction with the
section in the Prospectus entitled Management.

19
<PAGE>

Trustees and Officers. The Board has responsibility for the overall management
and operations of the Fund, including general supervision of the duties
performed by BGFA and other service providers. The Board currently consists of
four (4) Trustees. The Trustee denoted with an asterisk (*) is deemed to be an
"interested person" (as defined in the 1940 Act) of the Trust and the Funds.

<TABLE>
<CAPTION>
Principal occupations and affiliations
Name (age) Address Position during the past five years
---------------------------------------- ------------------ --------------------------------------------------
<S> <C> <C>
*Nathan Most (86) Trustee, President & Chairman of the Board,
PO Box 193 President, WEBS Index Fund, Inc. (Since 1996)
Burlingame, CA 94011-0193 Treasurer, Consultant to Barclays Global Investors,
Principal American Stock Exchange and the
Financial Officer Hong Kong Stock Exchange
Formerly Senior Vice President
American Stock Exchange (New Product
Development) (1976-1996)
Formerly President and Chairman of the
Board, Pacific Commodities Exchange
(1973-1976)

Richard K. Lyons (39) Trustee Professor, University of California,
350 Barrows Hall Berkeley: Haas School of Business
Haas School of Business (Since 1993)
UC Berkeley Professor, Columbia University: School
Berkeley, CA 94720 of Business & School of International
Affairs (1987--1993)
Member, Council on Foreign Relations
Consultant: IMF World Bank, Federal
Reserve Bank, European Commission
and United Nations
Board of Directors: Matthews
International Funds

George G.C. Parker (60) Trustee Associate Dean for Academic Affairs,
Graduate School of Business, Director of MBA Program, Professor,
Stanford University Stanford University: Graduate School of
521 Memorial Way, Business (Since 1988)
Room K301 Formerly, Director Executive Education,
Stanford, CA 94305 Stanford Business School (1979-1988)
Board of Directors: Affinity Group,
Bailard, Biehl and Kaiser, Inc., California
Casualty Group of Insurance Companies,
Continental Airlines, Inc., Community
First Financial Group, Dresdner/RCM
Mutual Funds, H. Warshow & Sons, Inc.

Donna M. McCarthy (33) Assistant Director, (formerly Manager) Mutual
Investors Bank and Trust Company Treasurer Fund Administration, Investors Bank
200 Clarendon Street and Trust Company Formerly, Manager,
Boston, MA 02116 Business Assurance Group, Coopers &
Lybrand (1988-1994)

Jeffrey J. Gaboury (31) Assistant Manager, Mutual Fund Administration,
Investors Bank and Trust Company Treasurer Reporting and Compliance, Investors
200 Clarendon Street Bank and Trust Company (since 1996)
Boston, MA 02116 Formerly, Assistant Manager, Fund
Compliance, Scudder, Stevens & Clark
(1992-1996)
</TABLE>

20
<PAGE>

<TABLE>
<CAPTION>
Principal occupations and affiliations
Name (age) Address Position during the past five years
---------------------------------------- ------------------ --------------------------------------------------
<S> <C> <C>
Susan C. Mosher (45) Secretary Director & Senior Counsel, Mutual Fund
Investors Bank and Trust Company Administration, Investors Bank and
200 Clarendon Street Trust Company (since 1995)
Boston, MA 02116 Formerly, Associate Counsel, 440
Financial Group (1992-1995)

Sandra I. Madden (33) Assistant Associate Counsel, Mutual Fund
Investors Bank and Trust Company Secretary Administration, Investors Bank and
200 Clarendon Street Trust Company (since 1999)
Boston, MA 02116 Formerly, Associate, Scudder Kemper
Investments, Inc. (1996-1999)
</TABLE>

* Mr. Most is deemed to be an "interested person" (as defined in the 1940 Act)
of the Trust and the Funds. He serves as Director to iShares, Inc., an
investment company with 23 investment portfolios also advised by BGFA, and
is a consultant to BGI.

Remuneration of Trustees and Officers. The Trust pays each Trustee an annual
fee of $50,000 plus a per meeting fee of $500 for meetings of the Board attended
by the Trustee. The Trust also reimburses each Trustee for travel and other out-
of-pocket expenses incurred by him/her in connection with attending such
meetings.

Assuming that four (4) regularly scheduled meetings and four (4) special
meetings of the Board are held annually, it is estimated that the compensation
paid to each Trustee during the calendar year ending December 31, 2000 will be:

<TABLE>
<CAPTION>
Aggregate Pension or
Estimated Retirement Total Estimated
Compensation Benefits Accrued Estimated Annual Compensation
from the As Part of Trust Benefits Upon from the Fund
Name of Trustee Trust Expenses Retirement and Fund Complex*
---------------------------- ----------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Nathan Most $54,000 Not Applicable. Not Applicable. $123,500
Thomas E. Flanigan** $54,000 Not Applicable. Not Applicable. $ 54,000
Richard K. Lyons $54,000 Not Applicable. Not Applicable. $ 54,000
George G. C. Parker $54,000 Not Applicable. Not Applicable. $ 54,000
</TABLE>

* As of the date of this Statement of Additional Information, there were 72
investment companies in the BGFA Fund Complex.

** Thomas E. Flanigan resigned from the Board of Trustees on November 15, 2000.

As of the date of this Statement of Additional Information, the Trust has been
organized for less than one full calendar year and therefore does not report the
total remuneration for the preceding fiscal year.

No Trustee or Officer is entitled to any pension or retirement benefits from the
Trust.

Investment Advisor. BGFA serves as investment advisor to each Fund pursuant to
an Investment Advisory Agreement between the Trust and BGFA. BGFA is a
California corporation indirectly owned by Barclays Bank PLC and is registered
as an investment advisor under the Investment Advisers Act of 1940 (the
"Advisers Act"). Under the Investment Advisory Agreement, BGFA, subject to the
supervision of the Board and in conformity with the stated investment policies
of each Fund, manages and administers the Trust and the investment of each
Fund's assets. BGFA is responsible for placing purchase and sale orders and
providing continuous supervision of the investment portfolio of each Fund.

Under the Investment Advisory Agreement, BGFA is responsible for all expenses of
the Trust, including the cost of transfer agency, custody, fund administration,
legal, audit and other services, except interest, taxes, brokerage commissions
and other expenses connected with the execution of portfolio transactions (which
are included in NAV), distribution fees and extraordinary expenses. For its
investment management services to each Fund, BGFA will be paid a management fee
equal to each Fund's allocable portion of the percentage listed below of such
Fund's aggregate net assets.

21
<PAGE>

<TABLE>
<CAPTION>
Management
iShares Index Fund Fee
----------------------------------------------------------------------------------- ----------
<S> <C>
iShares Goldman Sachs Consumer Industries Index Fund ___%
iShares Goldman Sachs Cyclical Industries Index Fund ___%
iShares Goldman Sachs Financials Index Fund ___%
iShares Goldman Sachs Healthcare Index Fund ___%
iShares Goldman Sachs Natural Resources Index Fund ___%
iShares Goldman Sachs Technology Index Fund ___%
iShares Goldman Sachs Utilities Index Fund ___%
iShares Russell Midcap Index Fund ___%
iShares Russell Midcap Growth Index Fund ___%
iShares Russell Midcap Value Index Fund ___%
</TABLE>

The Investment Advisory Agreement with respect to each Fund continues in effect
for two years from its effective date, and thereafter is subject to annual
approval by (i) the Board or (ii) vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund, provided that in either
event such continuance also is approved by a majority of the Board who are not
interested persons (as defined in the 1940 Act) of the Fund, by a vote cast in
person at a meeting called for the purpose of voting on such approval.

The Investment Advisory Agreement with respect to each Fund is terminable
without penalty, on 60-days notice, by the Board or by a vote of the holders of
a majority (as defined in the 1940 Act) of the applicable Fund's outstanding
voting securities. The Investment Advisory Agreement is also terminable upon 60
days notice by BGFA and will terminate automatically in the event of its
assignment (as defined in the 1940 Act).

Current interpretations of federal banking laws and regulations (i) may prohibit
Barclays Bank PLC, Barclays Global Investors, N.A. ("BGI"), and BGFA from
controlling, or underwriting the iShares, but (ii) would not prohibit Barclays
Bank PLC or BGFA generally from acting as an investment adviser, administrator,
transfer agent, or custodian to the Funds or from purchasing iShares as agent
for and upon the order of a customer.

BGFA believes that it may perform advisory and related services for the Trust
without violating applicable banking laws or regulations. However, the legal
requirements and interpretations about the permissible activities of banks and
their affiliates may change in the future. These changes could prevent BGFA from
continuing to perform services for the Trust. If this happens, the Board would
consider selecting other qualified firms. Any new investment advisory agreement
would be subject to shareholder approval.

If current restrictions on bank activities with mutual funds were relaxed, BGFA,
or its affiliates, would consider performing additional services for the Trust.
BGFA cannot predict whether these changes will be enacted, or the terms under
which BGFA, or its affiliates, might offer to provide additional services.

The Trust and BGFA have adopted Codes of Ethics under Rule 17j-1 of the 1940
Act. The Codes permit personnel subject to the Codes to invest in securities,
subject to certain limitations, including securities that may be purchased or
held by the Funds.

Administrator, Custodian, Transfer Agent and Securities Lending Agent. Investors
Bank & Trust Co. ("IBT") serves as Administrator, Custodian, Transfer Agent and
Securities Lending Agent for the Funds. Its principal address is 200 Clarendon
Street, Boston, MA 02111. Under the Administration Agreement with the Trust, IBT
provides necessary administrative and accounting services for the maintenance
and operations of the Trust and each Fund. In addition, IBT makes available the
office space, equipment, personnel and facilities required to provide such
services. Under the Custodian Agreement with the Trust, IBT maintains in
separate accounts cash, securities and other assets of the Trust and each Fund,
keeps all necessary accounts and records, and provides other services. IBT is
required, upon the order of the Trust, to deliver securities held by IBT and to
make payments for securities purchased by the

22
<PAGE>

Trust for each Fund. Also, under a Delegation Agreement, IBT is authorized to
appoint certain foreign custodians or foreign custody managers for Fund
investments outside the United States. Pursuant to a Transfer Agency and Service
Agreement with the Trust, IBT acts as a transfer agent for each Fund's
authorized and issued shares of beneficial interest, and as dividend disbursing
agent of the Trust. Under a Securities Lending Agency Agreement with the Trust,
IBT acts as the Trust's agent for the purpose of lending Trust securities to
third parties. As compensation for the foregoing services, IBT receives certain
out-of-pocket costs, transaction fees, and asset-based fees which are accrued
daily and paid monthly.

Distributor. SEI Investments Distribution Company is the Distributor of
iShares. Its principal address is 1 Freedom Valley Drive, Oaks, PA 19456. The
Distributor has entered into a Distribution Agreement with the Trust pursuant to
which it distributes iShares of each Fund. The Distribution Agreement will
continue for two years from its effective date and is renewable annually
thereafter. iShares are continuously offered for sale by the Funds through the
Distributor only in Creation Unit Aggregations, as described in the Prospectus
and below under the heading Creation and Redemption of Creation Units
Aggregations. iShares in less than Creation Unit Aggregations are not
distributed by the Distributor. The Distributor will deliver the Prospectus and,
upon request, the Statement of Additional Information to persons purchasing
Creation Unit Aggregations and will maintain records of both orders placed with
it and confirmations of acceptance furnished by it. The Distributor is a broker-
dealer registered under the Securities Exchange Act of 1934 (the "Exchange Act")
and a member of the National Association of Securities Dealers, Inc. ("NASD").

The Distribution Agreement for each Fund will provide that it may be terminated
at any time, without the payment of any penalty, on at least 60-days' written
notice to the other party (i) by vote of a majority of the Independent Trustees
or (ii) by vote of a majority of the outstanding voting securities (as defined
in the 1940 Act) of the relevant Fund. The Distribution Agreement will terminate
automatically in the event of its assignment (as defined in the 1940 Act).

The Distributor may also enter into agreements with securities dealers
("Soliciting Dealers") who will solicit purchases of Creation Unit Aggregations
of iShares. Such Soliciting Dealers may also be Participating Parties (as
defined below), DTC Participants (as defined below) and/or Investor Services
Organizations.

BGFA or BGI may, from time to time and from its own resources, pay, defray or
absorb costs relating to distribution, including payments out of its own
resources to the Distributor or to otherwise promote the sale of iShares.

Index Providers. Each Fund will be based upon a particular equity market index
compiled by one of two index providers: Goldman, Sachs & Co. and Frank Russell
Company, neither of which is affiliated with a Fund or with BGI or its
affiliates. Each Fund is entitled to use the Underlying Index pursuant to a sub-
licensing agreement with BGI, which in turn has a licensing agreement with the
relevant index provider. BGI has provided the sub-licenses without charge to any
Fund.

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<PAGE>

Brokerage Transactions

The policy of the Trust regarding purchases and sales of securities is that
primary consideration will be given to obtaining the most favorable prices and
efficient executions of transactions. Consistent with this policy, when
securities transactions are effected on a stock exchange, the Trust's policy is
to pay commissions that are considered fair and reasonable without necessarily
determining that the lowest possible commissions are paid in all circumstances.
In seeking to determine the reasonableness of brokerage commissions paid in any
transaction, BGFA relies upon its experience and knowledge regarding commissions
generally charged by various brokers.

In seeking to implement the Trust's policies, BGFA effects transactions with
those brokers and dealers that BGFA believes provide the most favorable prices
and are capable of providing efficient executions. BGFA and its affiliates do
not participate in soft dollar transactions.

It is expected that the Trust may execute brokerage or other agency transactions
through affiliates that are registered broker-dealers, for commissions, in
conformity with the 1940 Act, the Exchange Act and rules promulgated by the SEC.
Under these provisions, affiliates of BGFA are permitted to receive and retain
compensation for effecting portfolio transactions for the Trust on an exchange
if a written contract is in effect between the affiliate and the Trust expressly
permitting the affiliate of BGFA to receive and retain such compensation. These
rules further require that the commissions paid by the Trust for exchange
transactions not exceed "usual and customary" brokerage commissions. The rules
define "usual and customary" commissions to include amounts which are
"reasonable and fair compared to the commission, fee or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time." The Trustees, including
those who are not "interested persons" of the Trust, have adopted procedures for
evaluating the reasonableness of commissions paid and will review these
procedures periodically.

The Trust will not deal with affiliates in principal transactions unless
permitted by the applicable rule or regulation or by exemptive order.

BGFA assumes general supervision over placing orders on behalf of the Funds for
the purchase or sale of portfolio securities. If purchases or sales of portfolio
securities of the Funds and one or more other investment companies or clients
supervised by BGFA are considered at or about the same time, transactions in
such securities are allocated among the several investment companies and clients
in a manner deemed equitable to all by BGFA. In some cases, this procedure could
have a detrimental effect on the price or volume of the security as far as the
Funds are concerned. However, in other cases, it is possible that the ability to
participate in volume transactions and to negotiate lower brokerage commissions
will be beneficial to the Funds. The primary consideration is prompt execution
of orders at the most favorable net price.

Portfolio turnover may vary from year to year, as well as within a year. High
turnover rates are likely to result in comparatively greater brokerage expenses.
The portfolio turnover rate for each Fund is expected to be under 50%. The
overall reasonableness of brokerage commissions is evaluated by BGFA based upon
its knowledge of available information as to the general level of commissions
paid by the other institutional investors for comparable services.

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<PAGE>

Additional Information Concerning
the Trust

Capital Stock. The Trust was established as a Delaware business trust on
December 16, 1999. The Trust currently is comprised of 36 Funds. Each Fund
issues shares of beneficial interest, with no par value. The Board may designate
additional Funds.

Each iShare issued by a Fund has a pro rata interest in the assets of the
corresponding Fund. iShares have no preemptive, exchange, subscription or
conversion rights and are freely transferable. Each iShare is entitled to
participate equally in dividends and distributions declared by the Board with
respect to the relevant Fund, and in the net distributable assets of such Fund
on liquidation.

Each iShare has one vote with respect to matters upon which a shareholder vote
is required consistent with the requirements of the 1940 Act and the rules
promulgated thereunder. iShares of all Funds vote together as a single class
except that, if the matter being voted on affects only a particular Fund, and,
if a matter affects a particular Fund differently from other Funds, that Fund
will vote separately on such matter.

Under Delaware law, the Trust is not required to hold an annual meeting of
shareholders unless required to do so under the 1940 Act. The policy of the
Trust is not to hold an annual meeting of shareholders unless required to do so
under the 1940 Act. All iShares (regardless of the Fund) have noncumulative
voting rights for the Board. Under Delaware law, Trustees of the Trust may be
removed by vote of the shareholders.

Following the creation of the initial Creation Unit Aggregation(s) of iShares of
a Fund and immediately prior to the commencement of trading in such Fund's
iShares, a holder of iShares may be a "control person" of the Fund, as defined
in the 1940 Act. A Fund cannot predict the length of time for which one or more
shareholders may remain a control person of the Fund.

The Trust does not have information concerning the beneficial ownership of
iShares held by any Depository Trust Company ("DTC") Participants (as defined
below).

Shareholders may make inquiries by writing to the Trust, c/o the Distributor,
SEI Investments Distribution Company, at 1 Freedom Valley Drive, Oaks, PA 19456.

Absent an applicable exemption or other relief from the SEC or its staff,
officers and Trustees of the Fund and beneficial owners of 10% of the iShares of
a Fund ("Insiders") may be subject to the insider reporting, short-swing profit
and short sale provisions of Section 16 of the Exchange Act and the SEC's rules
promulgated thereunder. Insiders should consult with their own legal counsel
concerning their obligations under Section 16 of the Exchange Act.

Book Entry Only System. The following information supplements and should be
read in conjunction with the section in the Prospectus entitled Shareholder
Information.

DTC Acts as Securities Depository for the iShares. iShares of each Fund are
represented by securities registered in the name of DTC or its nominee and
deposited with, or on behalf of, DTC.

DTC, a limited-purpose trust company, was created to hold securities of its
participants (the "DTC Participants") and to facilitate the clearance and
settlement of securities transactions among the DTC Participants in such
securities

25
<PAGE>

through electronic book-entry changes in accounts of the DTC Participants,
thereby eliminating the need for physical movement of securities' certificates.
DTC Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations, some of whom (and/or
their representatives) own DTC. More specifically, DTC is owned by a number of
its DTC Participants and by the New York Stock Exchange ("NYSE"), the AMEX and
the NASD. Access to the DTC system is also available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a DTC Participant, either directly or indirectly (the
"Indirect Participants").

Beneficial ownership of iShares is limited to DTC Participants, Indirect
Participants and persons holding interests through DTC Participants and Indirect
Participants. Ownership of beneficial interests in iShares (owners of such
beneficial interests are referred to herein as "Beneficial Owners") is shown on,
and the transfer of ownership is effected only through, records maintained by
DTC (with respect to DTC Participants) and on the records of DTC Participants
(with respect to Indirect Participants and Beneficial Owners that are not DTC
Participants). Beneficial Owners will receive from or through the DTC
Participant a written confirmation relating to their purchase of iShares.

Conveyance of all notices, statements and other communications to Beneficial
Owners is effected as follows. Pursuant to the Depositary Agreement between the
Trust and DTC, DTC is required to make available to the Trust upon request and
for a fee to be charged to the Trust a listing of the iShares of each Fund held
by each DTC Participant. The Trust shall inquire of each such DTC Participant as
to the number of Beneficial Owners holding iShares, directly or indirectly,
through such DTC Participant. The Trust shall provide each such DTC Participant
with copies of such notice, statement or other communication, in such form,
number and at such place as such DTC Participant may reasonably request, in
order that such notice, statement or communication may be transmitted by such
DTC Participant, directly or indirectly, to such Beneficial Owners. In addition,
the Trust shall pay to each such DTC Participants a fair and reasonable amount
as reimbursement for the expenses attendant to such transmittal, all subject to
applicable statutory and regulatory requirements.

Share distributions shall be made to DTC or its nominee, Cede & Co., as the
registered holder of all iShares. DTC or its nominee, upon receipt of any such
distributions, shall credit immediately DTC Participants' accounts with payments
in amounts proportionate to their respective beneficial interests in iShares of
each Fund as shown on the records of DTC or its nominee. Payments by DTC
Participants to Indirect Participants and Beneficial Owners of iShares held
through such DTC Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in a "street name", and will be the
responsibility of such DTC Participants.

The Trust has no responsibility or liability for any aspect of the records
relating to or notices to Beneficial Owners, or payments made on account of
beneficial ownership interests in such iShares, or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests, or for
any other aspect of the relationship between DTC and the DTC Participants or the
relationship between such DTC Participants and the Indirect Participants and
Beneficial Owners owning through such DTC Participants.

DTC may decide to discontinue providing its service with respect to iShares at
any time by giving reasonable notice to the Trust and discharging its
responsibilities with respect thereto under applicable law. Under such
circumstances, the Trust shall take action to find a replacement for DTC to
perform its functions at a comparable cost.

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<PAGE>

Creation and Redemption of Creation
Unit Aggregations

Creation. The Trust issues and sells iShares of each Fund only in Creation
Unit Aggregations on a continuous basis through the Distributor, without a sales
load, at their NAVs next determined after receipt, on any Business Day (as
defined below), of an order in proper form.

A "Business Day" with respect to each Fund is any day on which the NYSE is open
for business. As of the date of the Prospectus, the NYSE observes the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Washington's Birthday,
Good Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving
Day and Christmas Day.

Fund Deposit. The consideration for purchase of Creation Unit Aggregations of
a Fund generally consists of the in-kind deposit of a designated portfolio of
equity securities -- the "Deposit Securities" -- per each Creation Unit
Aggregation constituting a substantial replication, or a portfolio sampling
representation, of the stocks involved in the relevant Fund's Underlying Index
("Fund Securities") and an amount of cash -- the "Cash Component" -- computed as
described below. Together, the Deposit Securities and the Cash Component
constitute the "Fund Deposit", which represents the minimum initial and
subsequent investment amount for a Creation Unit Aggregation of any Fund.

The Cash Component is sometimes also referred to as the Balancing Amount. The
Cash Component serves the function of compensating for any differences between
the NAV per Creation Unit Aggregation and the Deposit Amount (as defined below).
The Cash Component is an amount equal to the difference between the NAV of the
iShares (per Creation Unit Aggregation) and the "Deposit Amount" -- an amount
equal to the market value of the Deposit Securities. If the Cash Component is a
positive number (i.e., the NAV per Creation Unit Aggregation exceeds the Deposit
Amount), the creator will deliver the Cash Component. If the Cash Component is a
negative number (i.e., the NAV per Creation Unit Aggregation is less than the
Deposit Amount), the creator will receive the Cash Component.

BGFA, through the National Securities Clearing Corporation ("NSCC") (discussed
below), makes available on each Business Day, prior to the opening of business
on the NYSE (currently 9:30 a.m., Eastern time), the list of the names and the
required number of shares of each Deposit Security to be included in the current
Fund Deposit (based on information at the end of the previous Business Day) for
each such Fund.

Such Fund Deposit is applicable, subject to any adjustments as described below,
in order to effect creations of Creation Unit Aggregations of a given Fund until
such time as the next-announced composition of the Deposit Securities is made
available.

The identity and number of shares of the Deposit Securities required for a Fund
Deposit for each Fund changes as rebalancing adjustments and corporate action
events are reflected from time to time by BGFA with a view to the investment
objective of the relevant Fund. The composition of the Deposit Securities may
also change in response to adjustments to the weighting or composition of the
Component Stocks of the relevant Underlying Index. In addition, the Trust
reserves the right to permit or require the substitution of an amount of cash --
i.e., a "cash in lieu" amount -- to be added to the Cash Component to replace
any Deposit Security that may not be available in sufficient quantity for
delivery or that may not be eligible for transfer through the systems of DTC or
the Clearing Process (discussed below). The adjustments described above will
reflect changes known to BGFA on the date of

27
<PAGE>

announcement to be in effect by the time of delivery of the Fund Deposit, in the
composition of the Underlying Index being tracked by the relevant Fund or
resulting from certain corporate actions.

Procedures for Creation of Creation Unit Aggregations. To be eligible to place
orders with the Distributor and to create a Creation Unit Aggregation of a Fund,
an entity must be (i) a "Participating Party", i.e., a broker-dealer or other
participant in the clearing process through the Continuous Net Settlement System
of the NSCC (the "Clearing Process"), a clearing agency that is registered with
the SEC; or (ii) a DTC Participant (see the Book Entry Only System section),
and, in each case, must have executed an agreement with the Distributor, with
respect to creations and redemptions of Creation Unit Aggregations ("Participant
Agreement") (discussed below). A Participating Party and DTC Participant are
collectively referred to as an "Authorized Participant". Investors should
contact the Distributor for the names of Authorized Participants that have
signed a Participant Agreement. All iShares of a Fund, however created, will be
entered on the records of DTC in the name of Cede & Co. for the account of a DTC
Participant.

All orders to create iShares must be placed for one or more Creation Unit
Aggregations. Each Fund, except the iShares S&P 350 Europe Index Fund and
iShares S&P/TSE 60 Index Fund, is hereinafter referred to as a "Domestic Fund"
and each of the iShares S&P Europe 350 Index Fund and iShares S&P/TSE 60 Index
Fund is hereinafter referred to as a "Foreign Fund". Orders to create Creation
Unit Aggregations of the Foreign Funds cannot be placed through the Clearing
Process. All orders to create Creation Unit Aggregations, whether through the
Clearing Process (through a Participating Party) or outside the Clearing Process
(through a DTC Participant), must be received by the Distributor no later than
the closing time of the regular trading session on the NYSE ("Closing Time")
(ordinarily 4:00 p.m., Eastern time) in each case on the date such order is
placed in order for creation of Creation Unit Aggregations to be effected based
on the NAV of iShares of each Fund as next determined on such date after receipt
of the order in proper form. The date on which an order to create Creation Unit
Aggregations (or an order to redeem Creation Unit Aggregations, as discussed
below) is placed is referred to as the "Transmittal Date". Orders must be
transmitted by an Authorized Participant by telephone or other transmission
method acceptable to the Distributor pursuant to procedures set forth in the
Participant Agreement, as described below (see the Placement of Creation Orders
for Domestic Funds Using Clearing Process, the Placement of Creation Orders for
Domestic Funds Outside Clearing Process and the Placement of Creation Orders for
Foreign Funds sections). Severe economic or market disruptions or changes, or
telephone or other communication failure may impede the ability to reach the
Distributor or an Authorized Participant.

All orders to create Creation Unit Aggregations shall be placed with an
Authorized Participant, as applicable, in the form required by such Authorized
Participant. In addition, the Authorized Participant may request the investor to
make certain representations or enter into agreements with respect to the order,
e.g., to provide for payments of cash, when required. Investors should be aware
that their particular broker may not have executed a Participant Agreement and
that, therefore, orders to create Creation Unit Aggregations of a Fund have to
be placed by the investor's broker through an Authorized Participant that has
executed a Participant Agreement. In such cases there may be additional charges
to such investor. At any given time, there may be only a limited number of
broker-dealers that have executed a Participant Agreement and only a small
number of such Authorized Participants may have international capabilities.

Those placing orders for Creation Unit Aggregations of Domestic Funds through
the Clearing Process should afford sufficient time to permit proper submission
of the order to the Distributor prior to the Closing Time on the Transmittal
Date. Orders for Creation Unit Aggregations of Domestic Funds that are effected
outside the Clearing Process are likely to require transmittal by the DTC
Participant earlier on the Transmittal Date than orders effected using the
Clearing Process. Those persons placing orders outside the Clearing Process
should ascertain the deadlines applicable to DTC and the Federal Reserve Bank
wire system by contacting the operations department of the broker or depository
institution effectuating such transfer of Deposit Securities and Cash Component.

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<PAGE>

Those placing orders for Creation Unit Aggregations of Foreign Funds should
ascertain the applicable deadline for cash transfers by contacting the
operations department of the broker or depositary institution making the
transfer of the Cash Component. This deadline is likely to be significantly
earlier than the closing time of the regular trading session on the NYSE.
Investors should be aware that the Authorized Participant may require orders for
Creation Units placed with it to be in the form required by the individual
Authorized Participant, which form may not be the same as the form of purchase
order specified by the Trust that the Authorized Participant must deliver to the
Distributor.

Placement of Creation Orders for Domestic Funds Using Clearing Process. The
Clearing Process is the process of creating or redeeming Creation Unit
Aggregations through the Clearing Process. Fund Deposits made through the
Clearing Process must be delivered through a Participating Party that has
executed a Participant Agreement. The Participant Agreement authorizes the
Distributor to transmit through IBT to NSCC, on behalf of the Participating
Party, such trade instructions as are necessary to effect the Participating
Party's creation order. Pursuant to such trade instructions to NSCC, the
Participating Party agrees to deliver the requisite Deposit Securities and the
Cash Component to the Trust, together with such additional information as may be
required by the Distributor. An order to create Creation Unit Aggregations
through the Clearing Process is deemed received by the Distributor on the
Transmittal Date if (i) such order is received by the Distributor not later than
the Closing Time on such Transmittal Date, and (ii) all other procedures set
forth in the Participant Agreement are properly followed.

Placement of Creation Orders for Domestic Funds Outside Clearing Process. Fund
Deposits made outside the Clearing Process must be delivered through a DTC
Participant that has executed a Participant Agreement preapproved by BGFA and
the Distributor. A DTC Participant who wishes to place an order creating
Creation Unit Aggregations to be effected outside the Clearing Process does not
need to be a Participating Party, but such orders must state that the DTC
Participant is not using the Clearing Process and that the creation of Creation
Unit Aggregations will instead be effected through a transfer of securities and
cash directly through DTC. The Fund Deposit transfer must be ordered by the DTC
Participant on the Transmittal Date in a timely fashion so as to ensure the
delivery of the requisite number of Deposit Securities through DTC to the
account of the Fund by no later than 11:00 a.m., Eastern time, of the second
Business Day immediately following the Transmittal Date.

All questions as to the number of Deposit Securities to be delivered, and the
validity, form and eligibility (including time of receipt) for the deposit of
any tendered securities, will be determined by the Trust, whose determination
shall be final and binding. The amount of cash equal to the Cash Component must
be transferred directly to IBT through the Federal Reserve Bank wire transfer
system in a timely manner so as to be received by IBT no later than 11:00 a.m.,
Eastern time, on the second Business Day immediately following such Transmittal
Date. An order to create Creation Unit Aggregations outside the Clearing Process
is deemed received by the Distributor on the Transmittal Date if (i) such order
is received by the Distributor not later than the Closing Time on such
Transmittal Date; and (ii) all other procedures set forth in the Participant
Agreement are properly followed. However, if IBT does not receive both the
required Deposit Securities and the Cash Component by 11:00 a.m. on the second
Business Day immediately following the Transmittal Date, such order will be
canceled. Upon written notice to the Distributor, such canceled order may be
resubmitted the following Business Day using a Fund Deposit as newly constituted
to reflect the then current NAV of the Fund. The delivery of Creation Unit
Aggregations so created will occur no later than the third (3rd) Business Day
following the day on which the purchase order is deemed received by the
Distributor.

An additional charge of up to three (3) times the normal transaction fee (for a
total charge of up to four (4) times the normal transaction fee) may be imposed
with respect to transactions effected outside the Clearing Process (through a
DTC participant) and in the limited circumstances in which any cash can be used
in lieu of Deposit Securities to create Creation Units. This charge is subject
to a limit not to exceed 10/100 of 1% (10 basis points) of the value of one
Creation Unit as the time of creation.

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<PAGE>

Creation Unit Aggregations of Domestic Funds may be created in advance of
receipt by the Trust of all or a portion of the applicable Deposit Securities as
described below. In these circumstances, the initial deposit will have a value
greater than the NAV of the iShares on the date the order is placed in proper
form since, in addition to available Deposit Securities, cash must be deposited
in an amount equal to the sum of (i) the Cash Component, plus (ii) 125% of the
market value of the undelivered Deposit Securities (the "Additional Cash
Deposit"). The order shall be deemed to be received on the Business Day on which
the order is placed provided that the order is placed in proper form prior to
4:00 p.m., Eastern time, on such date and federal funds in the appropriate
amount are deposited with IBT by 11:00 a.m., Eastern time, the following
Business Day. If the order is not placed in proper form by 4:00 p.m. or federal
funds in the appropriate amount are not received by 11:00 a.m. the next Business
Day, then the order may be deemed to be rejected and the Authorized Participant
shall be liable to the Fund for losses, if any, resulting therefrom. An
additional amount of cash shall be required to be deposited with the Trust,
pending delivery of the missing Deposit Securities to the extent necessary to
maintain the Additional Cash Deposit with the Trust in an amount at least equal
to 125% of the daily marked to market value of the missing Deposit Securities.
To the extent that missing Deposit Securities are not received by 11:00 a.m.,
Eastern time, on the third Business Day following the day on which the purchase
order is deemed received by the Distributor or in the event a marked-to-market
payment is not made within one Business Day following notification by the
Distributor that such a payment is required, the Trust may use the cash on
deposit to purchase the missing Deposit Securities. Authorized Participants will
be liable to the Trust for the costs incurred by the Trust in connection with
any such purchases. These costs will be deemed to include the amount by which
the actual purchase price of the Deposit Securities exceeds the market value of
such Deposit Securities on the day the purchase order was deemed received by the
Distributor plus the brokerage and related transaction costs associated with
such purchases. The Trust will return any unused portion of the Additional Cash
Deposit once all of the missing Deposit Securities have been properly received
by IBT or purchased by the Trust and deposited into the Trust. In addition, a
transaction fee, as listed below, will be charged in all cases. The delivery of
Creation Unit Aggregations so created will occur no later than the third
Business Day following the day on which the purchase order is deemed received by
the Distributor.

Placement of Creation Orders for Foreign Funds. Fund Deposits in connection
with the Foreign Funds will not be made either through the Clearing Process or
through DTC. Instead, to initiate an order for a Creation Unit Aggregation of a
particular Fund, the Authorized Participant must give notice to the Distributor
of its intent to submit such an order to purchase not later than 4:00 p.m.,
Eastern time on the relevant Business Day. The Distributor shall cause BGFA and
IBT to be informed of such advice. IBT will then provide such information to the
appropriate sub-custodian(s). For each Fund, IBT shall cause the sub-custodian
of the Funds to maintain an account into which the Authorized Participant shall
deliver, on behalf of itself or the party on whose behalf it is acting, the
securities included in the designated Fund Deposit (or the cash value of all or
part of such securities, in the case of a permitted or required cash purchase or
"cash in lieu" amount), with any appropriate adjustments as advised by the
Trust. Deposit Securities must be delivered to an account maintained at the
applicable local sub-custodian(s). Following the notice of intention, an
irrevocable order to purchase Creation Unit Aggregations, in the form required
by the Trust, must be received by the Distributor from an Authorized Participant
on its own or another investor's behalf by the closing time of the regular
trading session on the NYSE (currently 4:00 p.m., Eastern time) on the relevant
Business Day. However when a relevant local market is closed due to local market
holidays, the local market settlement process will not commence until the end of
the local holiday period. Settlement must occur by 2:00 p.m., Eastern time, on
the contractual settlement date.

The Authorized Participant must also make available no later than 2:00 p.m.,
Eastern time, on the contractual settlement date, by means satisfactory to the
Trust, immediately-available or same-day funds estimated by the Trust to be
sufficient to pay the Cash Component next determined after acceptance of the
purchase order, together with the applicable purchase Transaction Fee. Any
excess funds will be returned following settlement of the issue of the Creation
Unit Aggregation.

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<PAGE>

To the extent contemplated by the applicable Participant Agreement, Creation
Unit Aggregations of Foreign Funds will be issued to such Authorized Participant
notwithstanding the fact that the corresponding Fund Deposits have not been
received in part or in whole, in reliance on the undertaking of the Authorized
Participant to deliver the missing Deposit Securities as soon as possible, which
undertaking shall be secured by such Authorized Participant's delivery and
maintenance of collateral consisting of cash in the form of U.S. dollars in
immediately available funds having a value (marked to market daily) at least
equal to 125% of the value of the missing Deposit Securities. Such cash
collateral must be delivered no later than 2:00 p.m., Eastern time, on the
contractual settlement date. The Participant Agreement will permit the Fund to
buy the missing Deposit Securities at any time and will subject the Authorized
Participant to liability for any shortfall between the cost to the Trust of
purchasing such securities and the value of the collateral.

Acceptance of Orders for Creation Unit Aggregations. The Trust reserves the
absolute right to reject a creation order transmitted to it by the Distributor
in respect of any Fund if: (i) the order is not in proper form; (ii) the
investor(s), upon obtaining the iShares ordered, would own 80% or more of the
currently outstanding shares of any Fund; (iii) the Deposit Securities delivered
are not as disseminated through the facilities of the Listing Exchange for that
date by IBT, as described above; (iv) acceptance of the Deposit Securities would
have certain adverse tax consequences to the Fund; (v) acceptance of the Fund
Deposit would, in the opinion of counsel, be unlawful; (vi) acceptance of the
Fund Deposit would otherwise, in the discretion of the Trust or BGFA, have an
adverse effect on the Trust or the rights of beneficial owners; or (vii) in the
event that circumstances outside the control of the Trust, IBT, the Distributor
and BGFA make it for all practical purposes impossible to process creation
orders. Examples of such circumstances include acts of God; public service or
utility problems such as fires, floods, extreme weather conditions and power
outages resulting in telephone, telecopy and computer failures; market
conditions or activities causing trading halts; systems failures involving
computer or other information systems affecting the Trust, BGFA, the
Distributor, DTC, NSCC, IBT or sub-custodian or any other participant in the
creation process, and similar extraordinary events. The Distributor shall notify
a prospective creator of a Creation Unit and/or the Authorized Participant
acting on behalf of the creator of a Creation Unit Aggregation of its rejection
of the order of such person. The Trust, IBT, a sub-custodian and the Distributor
are under no duty, however, to give notification of any defects or
irregularities in the delivery of Fund Deposits nor shall any of them incur any
liability for the failure to give any such notification.

All questions as to the number of shares of each security in the Deposit
Securities and the validity, form, eligibility, and acceptance for deposit of
any securities to be delivered shall be determined by the Trust, and the Trust's
determination shall be final and binding.

Creation Transaction Fee. A purchase transaction fee is imposed for the
transfer and other transaction costs of a Fund associated with the issuance of
Creation Units of iShares. The fee is a single charge and will be the same
regardless of the number of Creation Units purchased by an investor on the same
day. Purchasers of Creation Units of iShares for cash are required to pay an
additional variable charge to compensate for brokerage and market impact
expenses. Where the Trust permits an in-kind purchaser to substitute cash in
lieu of depositing a portion of the Deposit Securities, the purchaser will be
assessed the additional variable charge for cash purchases on the "cash in lieu"
portion of its investment. Purchasers of iShares in Creation Units are
responsible for the costs of transferring the securities constituting the
Deposit Securities to the account of the Trust. Investors are also responsible
for payment of the costs of transferring the Deposit Securities to the Trust.
Investors who use the services of a broker or other such intermediary may be
charged a fee for such services.

The following table sets forth the creation transaction fee for each of the
Funds.

31
<PAGE>

<TABLE>
<CAPTION>
Maximum
Creation
Transaction
Name of Fund Amount Fee*
-------------------------------------------------------------------------- ------------ --------------
<S> <C> <C>
iShares Goldman Sachs Consumer Industries Index Fund $1,150 $ 4,600
iShares Goldman Sachs Cyclical Industries Index Fund $1,000 $ 4,000
iShares Goldman Sachs Financials Index Fund $1,000 $ 4,000
iShares Goldman Sachs Healthcare Index Fund $ 500 $ 2,000
iShares Goldman Sachs Natural Resources Index Fund $ 450 $ 1,800
iShares Goldman Sachs Technology Index Fund $ 900 $ 3,600
iShares Goldman Sachs Utilities Index Fund $ 600 $ 2,400
iShares Russell Midcap Index Fund $3,000 $12,000
iShares Russell Midcap Growth Index Fund $1,600 $ 6,400
iShares Russell Midcap Value Index Fund $2,400 $ 9,600
</TABLE>

* If a Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee will
be charged of up to four times the Standard Creation or Redemption Transaction
Fee.

Redemption of iShares in Creation Units Aggregations. Shares may be redeemed
only in Creation Unit Aggregations at their NAV next determined after receipt of
a redemption request in proper form by the Fund through IBT and only on a
Business Day. A Fund will not redeem iShares in amounts less than Creation Unit
Aggregations. Beneficial Owners must accumulate enough iShares in the secondary
market to constitute a Creation Unit Aggregation in order to have such iShares
redeemed by the Trust. There can be no assurance, however, that there will be
sufficient liquidity in the public trading market at any time to permit assembly
of a Creation Unit Aggregation. Investors should expect to incur brokerage and
other costs in connection with assembling a sufficient number of shares to
constitute a redeemable Creation Unit Aggregation.

With respect to each Fund, BGFA, (i) through the NSCC for Domestic Funds, and
(ii) through the Distributor, makes available immediately prior to the opening
of business on the AMEX (currently 9:30 a.m., Eastern time) on each Business
Day, the identity of the Fund Securities that will be applicable (subject to
possible amendment or correction) to redemption requests received in proper form
(as described below) on that day. Fund Securities received on redemption may not
be identical to Deposit Securities that are applicable to creations of Creation
Unit Aggregations.

Unless cash redemptions are available or specified for a Fund, the redemption
proceeds for a Creation Unit Aggregation generally consist of Fund Securities --
as announced on the Business Day of the request for redemption received in
proper form -- plus cash in an amount equal to the difference between the NAV of
the iShares being redeemed, as next determined after a receipt of a request in
proper form, and the value of the Fund Securities (the "Cash Redemption
Amount"), less a redemption transaction fee as listed below. In the event that
the Fund Securities have a value greater then the NAV of the iShares, a
compensating cash payment equal to the difference is required to be made by or
through an Authorized Participant by the redeeming shareholder.

The right of redemption may be suspended or the date of payment postponed with
respect to any Fund (i) for any period during which the NYSE is closed (other
than customary weekend and holiday closings); (ii) for any period during which
trading on the NYSE is suspended or restricted; (iii) for any period during
which an emergency exists as a result of which disposal of the iShares of a Fund
or determination of such Fund's NAV is not reasonably practicable; or (iv) in
such other circumstances as is permitted by the SEC.

Redemption Transaction Fee. A redemption transaction fee is imposed to offset
transfer and other transaction costs that may be incurred by the relevant Fund.
The fee is a single charge and will be the same regardless of the number of
Creation Units purchased by an investor on the same day. The redemption
transaction fees for redemptions in kind and for cash and the additional
variable charge for cash redemptions (when cash redemptions are available or
specified) are listed below. Investors will also bear the costs of transferring
the Fund Securities from the Trust to

32
<PAGE>

their account or on their order. Investors who use the services of a broker or
other such intermediary may be charged a fee for such services.

The following table sets forth the redemption transaction fee for each of the
Funds.

<TABLE>
<CAPTION>
Maximum
Redemption
Transaction
Name of Fund Amount Fee*
---------------------------------------------------------------------------------- ------------ --------------
<S> <C> <C>
iShares Goldman Sachs Consumer Industries Index Fund $1,150 $ 4,600
iShares Goldman Sachs Cyclical Industries Index Fund $1,000 $ 4,000
iShares Goldman Sachs Financials Index Fund $1,000 $ 4,000
iShares Goldman Sachs Healthcare Index Fund $ 500 $ 2,000
iShares Goldman Sachs Natural Resources Index Fund $ 450 $ 1,800
iShares Goldman Sachs Technology Index Fund $ 900 $ 3,600
iShares Goldman Sachs Utilities Index Fund $ 600 $ 2,400
iShares Russell Midcap Index Fund $3,000 $12,000
iShares Russell Midcap Growth Index Fund $1,600 $ 6,400
iShares Russell Midcap Value Index Fund $2,400 $ 9,600
</TABLE>

Placement of Redemption Orders for Domestic Funds Using Clearing Process. Orders
to redeem Creation Unit Aggregations of Domestic Funds through the Clearing
Process must be delivered through a Participating Party that has executed the
Participant Agreement. An order to redeem Creation Unit Aggregations using the
Clearing Process is deemed received by the Trust on the Transmittal Date if (i)
such order is received by IBT not later than 4:00 p.m., Eastern time, on such
Transmittal Date, and (ii) all other procedures set forth in the Participant
Agreement are properly followed; such order will be effected based on the NAV of
the Fund as next determined. An order to redeem Creation Unit Aggregations using
the Clearing Process made in proper form but received by the Trust after 4:00
p.m., Eastern time, will be deemed received on the next Business Day immediately
following the Transmittal Date and will be effected at the NAV next determined
on such Business Day. The requisite Fund Securities and the Cash Redemption
Amount will be transferred by the third NSCC Business Day following the date on
which such request for redemption is deemed received.

Placement of Redemption Orders for Domestic Funds Outside Clearing Process.
Orders to redeem Creation Unit Aggregations of Domestic Funds outside the
Clearing Process must be delivered through a DTC Participant that has executed
the Participant Agreement. A DTC Participant who wishes to place an order for
redemption of Creation Unit Aggregations to be effected outside the Clearing
Process does not need to be a Participating Party, but such orders must state
that the DTC Participant is not using the Clearing Process and that redemption
of Creation Unit Aggregations will instead be effected through transfer of
iShares directly through DTC. An order to redeem Creation Unit Aggregations
outside the Clearing Process is deemed received by the Trust on the Transmittal
Date if (i) such order is received by IBT not later than 4:00 p.m., Eastern
time, on such Transmittal Date; (ii) such order is accompanied or followed by
the requisite number of iShares of the Fund specified in such order, which
delivery must be made through DTC to IBT no later than 11:00 a.m., Eastern time,
on the next Business Day immediately following such Transmittal Date (the "DTC
Cut-Off-Time"); and (iii) all other procedures set forth in the Participant
Agreement are properly followed. After the Trust has deemed an order for
redemption outside the Clearing Process received, the Trust will initiate
procedures to transfer the requisite Fund Securities which are expected to be
delivered within three Business Days and the Cash Redemption Amount to the
Authorized Participant on behalf of the redeeming Beneficial Owner by the third
Business Day following the Transmittal Date on which such redemption order is
deemed received by the Trust.

33
<PAGE>

Placement of Redemption Orders for Foreign Funds. Orders to redeem Creation Unit
Aggregations of Foreign Funds must be delivered through an Authorized
Participant that has executed a Participant Agreement. Investors other than
Authorized Participants are responsible for making arrangements for a redemption
request to be made through an Authorized Participant. An order to redeem
Creation Unit Aggregations of Foreign Funds is deemed received by the Trust on
the Transmittal Date if (i) such order is received by IBT not later than 4:00
p.m., Eastern time, on such Transmittal Date; (ii) such order is accompanied or
followed by the requisite number of iShares of the Fund specified in such order,
which delivery must be made through DTC to IBT no later than the DTC Cut-Off
time; and (iii) all other procedures set forth in the Participant Agreement are
properly followed. Deliveries of Fund Securities to redeeming investors
generally will be made within three Business Days. Due to the schedule of
holidays in certain countries, however, the delivery of in-kind redemption
proceeds for Foreign Funds may take longer than three Business Days after the
day on which the redemption request is received in proper form. In such cases,
the local market settlement procedures will not commence until the end of the
local holiday periods. See below for a list of the local holidays in the foreign
countries relevant to the Foreign Funds.

In connection with taking delivery of shares of Fund Securities upon redemption
of iShares of Foreign Funds, a redeeming Beneficial Owner or Authorized
Participant action on behalf of such Beneficial Owner must maintain appropriate
security arrangements with a qualified broker-dealer, bank or other custody
providers in each jurisdiction in which any of the Fund Securities are
customarily traded, to which account such Fund Securities will be delivered.

To the extent contemplated by an Authorized Participant's agreement, in the
event the Authorized Participant has submitted a redemption request in proper
form but is unable to transfer all or part of the Creation Unit Aggregation to
be redeemed to the Distributor, on behalf of the Fund, at or prior to the
closing time of the regular trading session on the NYSE on the date such
redemption request is submitted, the Distributor will nonetheless accept the
redemption request in reliance on the undertaking by the Authorized Participant
to deliver the missing iShares as soon as possible, which undertaking shall be
secured by the Authorized Participant's delivery and maintenance of collateral
consisting of cash having a value (marked to market daily) at least equal to
125% of the value of the missing iShares. The current procedures for
collateralization of missing iShares require, among other things, that any cash
collateral shall be in the form of U.S. dollars in immediately-available funds
and shall be held by IBT and marked to market daily, and that the fees of IBT
and any sub-custodians in respect of the delivery, maintenance and redelivery of
the cash collateral shall be payable by the Authorized Participant. The
Authorized Participant's agreement will permit the Trust, on behalf of the
affected Fund, to purchase the missing iShares or acquire the Deposit Securities
and the Cash Component underlying such shares at any time and will subject the
Authorized Participant to liability for any shortfall between the cost to the
Trust of purchasing such shares, Deposit Securities or Cash Component and the
value of the collateral.

The calculation of the value of the Fund Securities and the Cash Redemption
Amount to be delivered upon redemption will be made by IBT according to the
procedures set forth under Determination of NAV computed on the Business Day on
which a redemption order is deemed received by the Trust. Therefore, if a
redemption order in proper form is submitted to IBT by a DTC Participant not
later than Closing Time on the Transmittal Date, and the requisite number of
iShares of the relevant Fund are delivered to IBT prior to the DTC Cut-Off-Time,
then the value of the Fund Securities and the Cash Redemption Amount to be
delivered will be determined by IBT on such Transmittal Date. If, however, a
redemption order is submitted to IBT by a DTC Participant not later than the
Closing Time on the Transmittal Date but either (i) the requisite number of
iShares of the relevant Fund are not delivered by the DTC Cut-Off-Time, as
described above, on such Transmittal Date, or (ii) the redemption order is not
submitted in proper form, then the redemption order will not be deemed received
as of the Transmittal Date. In such case, the value of the Fund Securities and
the Cash Redemption Amount to be delivered will be computed on the Business Day
that such order is deemed received by the Trust, i.e., the Business Day on which
the iShares of the

34
<PAGE>

relevant Fund are delivered through DTC to IBT by the DTC Cut-Off-Time on such
Business Day pursuant to a properly submitted redemption order.

If it is not possible to effect deliveries of the Fund Securities, the Trust may
in its discretion exercise its option to redeem such iShares in cash, and the
redeeming Beneficial Owner will be required to receive its redemption proceeds
in cash. In addition, an investor may request a redemption in cash that the Fund
may, in its sole discretion, permit. In either case, the investor will receive a
cash payment equal to the NAV of its iShares based on the NAV of iShares of the
relevant Fund next determined after the redemption request is received in proper
form (minus a redemption transaction fee and additional charge for requested
cash redemptions specified above, to offset the Trust's brokerage and other
transaction costs associated with the disposition of Fund Securities). A Fund
may also, in its sole discretion, upon request of a shareholder, provide such
redeemer a portfolio of securities that differs from the exact composition of
the Fund Securities but does not differ in NAV.

Redemptions of iShares for Fund Securities will be subject to compliance with
applicable federal and state securities laws and each Fund (whether or not it
otherwise permits cash redemptions) reserves the right to redeem Creation Unit
Aggregations for cash to the extent that the Trust could not lawfully deliver
specific Fund Securities upon redemptions or could not do so without first
registering the Fund Securities under such laws. An Authorized Participant or an
investor for which it is acting subject to a legal restriction with respect to a
particular stock included in the Fund Securities applicable to the redemption of
a Creation Unit Aggregation may be paid an equivalent amount of cash. The
Authorized Participant may request the redeeming Beneficial Owner of the iShares
to complete an order form or to enter into agreements with respect to such
matters as compensating cash payment.

Because the Portfolio Securities of a Foreign Fund may trade on the relevant
exchange(s) on days that the NYSE is closed or are otherwise not Business Days
for such Foreign Fund, stockholders may not be able to redeem their shares of
such Foreign Fund, or to purchase and sell iShares of such Foreign Fund on the
AMEX or the CBOE, on days when the NAV of such Foreign Fund could be
significantly affected by events in the relevant foreign markets.

Foreign Market Hours

<TABLE>
<S> <C>
Australia
Primary Exchange Trading Hours: Monday through Friday, 10:00 a.m. to 4:00 p.m.
Closing Single Price Auction: 4:00 p.m. to 4:05 p.m.
Late trading daily: 4:05 p.m. to 7:00 p.m.
Austria
Primary Exchange Trading Hours: Monday through Friday, 9:16 a.m. to 3:00 p.m.
Electronic Quote Delivery Service (EQOS): 9:30 a.m. to 3:00 p.m. (Other trading)
Belgium
Primary Exchange Trading Hours: Monday through Friday, 10:00 a.m. to 4:45 p.m.
Brazil
Primary Exchange Trading Hours: Monday through Friday, 11:30 a.m. to 1:00 p.m.;
2:30 p.m. to 6:00 p.m.
Canada
Primary Exchange Trading Hours: Monday through Friday, 9:30 a.m. to 4:00 p.m.
Chile
Primary Exchange Trading Hours: Monday through Friday, 9:30 a.m. to 5:30 p.m.
Denmark
Primary Exchange Trading Hours: Monday through Friday, 9:00 a.m. to 5:00 p.m.
Finland
Primary Exchange Trading Hours: Monday through Friday 10:30 a.m. to 5:30 p.m.
Continuous trading (Preceded by a
10 min pre-matching period)
France
</TABLE>

35
<PAGE>

<TABLE>
<S> <C>
Primary Exchange Trading Hours: Monday through Friday, 8:30 a.m. to 10:00 a.m.
(Pre-market) 10:00 a.m. to 5:05 p.m.
Germany
Primary Exchange Trading Hours: Monday through Friday, 8:30 a.m. to 5:00 p.m.
Greece
Primary Exchange Trading Hours: Monday through Friday, 10:45 a.m. to 1:30 p.m.
(Pre-trading 10:15 a.m. to 10:45 a.m.)
Hong Kong
Primary Exchange Trading Hours: Monday through Friday, 10:00 a.m. to 12:30 p.m./
2:30 p.m. to 4:00 p.m.
Indonesia
Primary Exchange Trading Hours: Monday through Thursday, 9:30 a.m. to
12:00 p.m.; 1:30 p.m. to 4:00 p.m. Friday; 9:30 a.m.
to 11:30 a.m. and 2:00 p.m. to 4:00 p.m.
Ireland
Primary Exchange Trading Hours: Monday through Friday, 8:30 a.m. to 5:30 p.m.
Italy
Primary Exchange Trading Hours: Monday through Friday, 8:00 a.m. to 9:30 a.m.
(Pre-open)/ 9:30-5:45 (Trading)
Japan
Primary Exchange Trading Hours: Monday through Friday, 9:30 a.m. to 11:00a.m./
12:30 pm to 3:00 pm (Osaka has a 10 min pre &
post session)
Mexico
Primary Exchange Trading Hours: Monday through Friday, 8:30 a.m. to 3:00 p.m.
Netherlands
Primary Exchange Trading Hours: Monday through Friday, 9:30 a.m. to 4:30 p.m.
New Zealand
Primary Exchange Trading Hours: Monday through Friday, 8:30 a.m. to 9:30 a.m.
(Pre-market)
9:30 a.m. to 3:30 p.m.
Norway
Primary Exchange Trading Hours: Monday through Friday, 10:00 a.m. to 4:00 p.m.
(with /1//2 hour, pre-market matching session).
Philippines
Primary Exchange Trading Hours: Monday through Friday, 9:30 a.m. to 12:00 p.m.
There is a 10 minute extension at the close.
Portugal
Primary Exchange Trading Hours: Monday through Friday, 8:30 a.m. to 4:30 p.m.
Singapore
Primary Exchange Trading Hours: Monday through Friday, 9:00 a.m. to 12:30 p.m./
2:00 p.m. to 5:00 p.m.
South Africa
Primary Exchange Trading Hours: Monday through Friday, 9:30 a.m. to 1:00 p.m./
2:00 p.m. to 4:30 p.m.
South Korea
Primary Exchange Trading Hours: Monday through Friday, 9:30 a.m. to 12:00 p.m./
1:00 p.m. to 3:00 p.m. After-hours session
3:10 p.m. to 3:40 p.m.
Spain
Primary Exchange Trading Hours: Monday through Friday, 9:00 a.m. to 10:00 a.m.
(Pre-opening) 10:00 a.m. to 5:00 p.m.
(Trading)
Sweden
Primary Exchange Trading Hours: Monday through Friday, 10:00 a.m. to 5:00 p.m.
</TABLE>

36
<PAGE>

<TABLE>
<S> <C>
Switzerland
Primary Exchange Trading Hours: Monday through Friday, 9:00 a.m. to 5:00 p.m.
Taiwan
Primary Exchange Trading Hours: Monday through Friday, 9:00 a.m. to 12:00 p.m.
Saturday, 9:00 a.m. to 11:00 a.m.
(Closed 2nd & 4th Saturday of each month)
Thailand
Primary Exchange Trading Hours: Monday through Friday, 10:00 a.m. to 12:30 p.m./
2:30 p.m. to 4:30 p.m.
United Kingdom
Primary Exchange Trading Hours: Monday through Friday, 9:00 a.m. to 4:30 p.m.
United States
Primary Exchange Trading Hours: Monday through Friday, 9:00 a.m. to 4:00 p.m.
(NASDAQ) 9:30 a.m. to 4:00 p.m.
(NYSE)
Venezuela
Primary Exchange Trading Hours: Monday through Friday, 9:45 a.m. to 2:00 p.m.
</TABLE>

Regular Holidays. The dates in calendar year 2000 in which the regular
holidays affecting the relevant securities markets of the below listed countries
are as follows:

<TABLE>
<S> <C> <C>
Australia
January 3 April 24 August 7
January 26 April 25 December 25
April 21 June 12 December 26
Austria
January 6 June 12 December 8
April 21 June 22 December 24
April 24 August 15 December 25
May 1 October 26 December 29
June 1 November 1
Belgium
April 24 June 12 November 1
May 1 July 21 December 25
June 1 August 15 December 26
Brazil
March 6 May 1 October 12
March 7 June 22 November 2
April 21 September 7 November 15
December 25
Canada
January 3 July 3 October 9
April 21 August 7 December 25
May 22 September 4 December 26
Chile
April 21 August 15 October 12
May 1 September 4 November 1
June 22 September 18 December 8
June 28 September 19 December 25
Denmark
April 20 May 19 June 10
April 21 June 1 December 24
April 24 June 5 December 25
December 26
Finland
January 6 April 24 June 23
</TABLE>

37
<PAGE>

<TABLE>
<S> <C> <C>
April 20 (early close) May 1 December 6
April 21 June 1 December 25
December 26
France
April 21 June 1 November 1
April 24 June 12 December 25
May 1 July 14 December 26
May 8 August 15
Germany
April 21 June 1 October 3
April 24 June 12 December 25
May 1 June 22 December 26
Greece
January 6 May 1 December 25
March 13 June 19 December 26
April 28 August 15
Hong Kong
February 4 April 24 September 13
February 7 May 1 October 2
April 4 May 11 October 6
April 21 June 6 December 25
Indonesia
March 16 May 18 October 25
April 4 June 1 December 25
April 6 June 15 December 27
April 21 August 17 December 28
Ireland
January 3 April 24 August 7
March 17 May 1 October 30
April 21 June 5 December 25
December 26
Italy
April 24 August 15 December 8
May 1 November 1 December 25
December 26
Japan
January 3 May 3 September 15
January 10 May 4 October 9
February 11 May 5 November 3
March 20 July 20 November 23
Korea
January 3 May 1 August 15
February 4 May 5 September 11
March 1 May 11 September 12
April 5 June 6 September 13
April 13 July 17 October 3
December 25
Mexico
March 21 May 1 December 12
April 20 May 5 December 25
April 21 December 1
Netherlands
April 21 May 5 June 12
April 24 June 1 December 25
December 26
</TABLE>

38
<PAGE>

<TABLE>
<S> <C> <C>
New Zealand
January 3 April 21 June 5
January 4 April 24 October 23
January 24 April 25 December 25
December 26
Norway
April 20 April 21 April 24
May 1 June 1 December 25
May 17 June 12 December 26
Philippines
February 25 May 1 November 2
April 20 June 12 November 30
April 21 November 1 December 25
Portugal
March 7 May 1 November 1
April 21 June 22 December 1
April 24 August 15 December 8
April 25 October 5 December 25
Singapore
February 7 May 1 October 26
March 16 May 18 December 25
April 21 August 9 December 27
South Africa
January 3 April 27 August 9
March 21 May 1 September 25
April 21 June 16 December 25
December 26
Spain
January 6 May 1 December 6
April 21 October 12 December 8
April 24 November 1 December 25
December 26
Sweden
January 6 May 1 June 23
April 21 June 1 December 25
April 24 June 12 December 26
Switzerland
January 3 May 1 August 1
April 21 June 1 December 25
April 24 June 12 December 26
Taiwan (includes Saturday
Trading)
January 1 April 3 September 9
January 3 April 4 September 12
January 8 April 8 September 23
January 22 April 22 October 10
February 2 May 1 October 14
February 3 May 13 October 28
February 4 May 27 November 11
February 5 June 6 November 25
February 7 June 10 December 9
February 12 June 24 December 23
February 26 July 8 December 25
February 28 July 22
March 11 August 12
</TABLE>

39
<PAGE>

<TABLE>
<S> <C> <C>
March 25 August 26
Thailand
January 3 May 1 October 23
February 21 May 5 December 5
April 6 May 17 December 11
April 13 July 17
April 14 August 14
United Kingdom
January 3 May 1 December 25
April 21 May 29 December 26
April 24 August 28
United States
January 17 May 29 October 9
February 21 July 4 November 10
April 21 September 4 November 23
December 25
Venezuela
January 3 June 5 November 6
March 6 June 26 December 11
March 7 July 3 December 25
April 19 July 5
</TABLE>

Settlement Periods Greater than Seven Days for Year 2000

<TABLE>
<CAPTION>
# of
Settlement Trade Calendar
Country Period Date Settlement Days
------- ------ ---- ---------- ----
<S> <C> <C> <C> <C>
Belgium Forward Market 12/11/00 12/27 16
Stocks:

End of a two
week period
Denmark T+3 4/17/00 4/25/00 8
France Last day 8/1/00 8/31/00 30
of acct
trading
month
Germany T+5 12/18/00 12/27/00 9
United Kingdom T+5 12/18/00 12/27/00 9
Italy T+5 12/18/00 12/27/00 9
Norway T+3 4/17/00 4/25/00 8
</TABLE>

40
<PAGE>

Taxes

The following information also supplements and should be read in conjunction
with the section in the Prospectus entitled Taxes.

Each Fund intends to qualify for and to elect treatment as a separate Regulated
Investment Company ("RIC") under Subchapter M of the Internal Revenue Code (the
"Code"). To qualify for treatment as a RIC, a company must annually distribute
at least 90% of its net investment company taxable income (which includes
dividends, interest and net short-term capital gains) and meet several other
requirements. Among such other requirements are the following: (i) at least 90%
of the company's annual gross income must be derived from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock or securities or foreign currencies, or other income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in such stock, securities or currencies;
and (ii) at the close of each quarter of the company's taxable year, (a) at
least 50% of the market value of the company's total assets must be represented
by cash and cash items, U.S. government securities, securities of other
regulated investment companies and other securities, with such other securities
limited for purposes of this calculation in respect of any one issuer to an
amount not greater than 5% of the value of the company's assets and not greater
than 10% of the outstanding voting securities of such issuer, and (b) not more
than 25% of the value of its total assets may be invested in the securities of
any one issuer or of two or more issuers that are controlled by the company
(within the meaning of Section 851(b)(3)(B) of the Code) and that are engaged in
the same or similar trades or businesses or related trades or businesses (other
than U.S. government securities or the securities of other regulated investment
companies).

A Fund will be subject to a 4% excise tax on certain undistributed income if it
does not distribute to its shareholders in each calendar year at least 98% of
its ordinary income for the calendar year plus 98% of its capital gain net
income for the twelve months ended October 31 of such year. Each Fund intends to
declare and distribute dividends and distributions in the amounts and at the
times necessary to avoid the application of this 4% excise tax.

Each Fund, but in particular the iShares Europe 350 Index Fund and the iShares
S&P/TSE 60 Index Fund, may be subject to foreign income taxes withheld at
source. Each Fund that is permitted to do so will elect to "pass through" to its
investors the amount of foreign income taxes paid by the Fund provided that the
investor held the iShares of the Fund, and the Fund held the security, on the
dividend settlement date and for at least fourteen additional days immediately
before and/or thereafter, with the result that each investor will (i) include in
gross income, even though not actually received, the investor's pro rata share
of the Fund's foreign income taxes, and (ii) either deduct (in calculating U.S.
taxable income) or credit (in calculating U.S. federal income tax) the
investor's pro rata share of the Fund's foreign income taxes. A foreign tax
credit may not exceed the investor's U.S. federal income tax otherwise payable
with respect to the investor's foreign source income. For this purpose, each
shareholder must treat as foreign source gross income (i) his proportionate
share of foreign taxes paid by the Fund and (ii) the portion of any dividend
paid by the Fund that represents income derived from foreign sources; the Fund's
gain from the sale of securities will generally be treated as U.S. source
income. This foreign tax credit limitation is applied separately to separate
categories of income; dividends from the Fund will be treated as "passive" or
"financial services" income for this purpose. The effect of this limitation may
be to prevent investors from claiming as a credit the full amount of their pro
rata share of the Fund's foreign income taxes.

If any Fund owns shares in certain foreign investment entities, referred to as
"passive foreign investment companies", the Fund will be subject to one of the
following special tax regimes: (i) the Fund is liable for U.S. federal income
tax, and an additional charge in the nature of interest, on a portion of any
"excess distribution" from such foreign entity or any gain from the disposition
of such shares, even if the entire distribution or gain is paid out by the Fund
as a dividend to its shareholders; (ii) if the Fund were able and elected to
treat a passive foreign investment company as a "qualified electing fund", the
Fund would be required each year to include in income, and distribute to
shareholders

41
<PAGE>

in accordance with the distribution requirements set forth above, the Fund's pro
rata share of the ordinary earnings and net capital gains of the passive foreign
investment company, whether or not such earnings or gains are distributed to the
Fund; or (iii) the Fund may be entitled to mark-to-market annually the shares of
the passive foreign investment company, and, in such event, would be required to
distribute to shareholders any such mark-to-market gains in accordance with the
distribution requirements set forth above.

The Trust on behalf of each Fund has the right to reject an order for a purchase
of iShares if the purchaser (or group of purchasers) would, upon obtaining the
iShares so ordered, own 80% or more of the outstanding iShares of a given Fund
and if, pursuant to section 351 of the Code, that Fund would have a basis in the
securities different from the market value of such securities on the date of
deposit. The Trust also has the right to require information necessary to
determine beneficial share ownership for purposes of the 80% determination.

The foregoing discussion is a summary only and is not intended as a substitute
for careful tax planning. Purchasers of iShares should consult their own tax
advisors as to the tax consequences of investing in such shares, including under
state, local and foreign tax laws. Finally, the foregoing discussion is based on
applicable provisions of the Code, regulations, judicial authority and
administrative interpretations in effect on the date hereof. Changes in
applicable authority could materially affect the conclusions discussed above,
and such changes often occur.

Federal Tax Treatment of Futures and Options Contracts. Each Fund is required,
for federal income tax purposes, to mark-to-market and recognize as income for
each taxable year its net unrealized gains and losses on certain futures and
options contracts as of the end of the year as well as those actually realized
during the year. Gain or loss from futures and options contracts on broad-based
indices required to be marked-to-market will be 60% long-term and 40% short-term
capital gain or loss. Application of this rule may alter the timing and
character of distributions to shareholders. A Fund may be required to defer the
recognition of losses on futures contracts, option contracts and swaps to the
extent of any unrecognized gains on offsetting positions held by the Fund.

In order for a Fund to continue to qualify for federal income tax treatment as a
RIC, at least 90% of its gross income for a taxable year must be derived from
qualifying income, i.e., dividends, interest, income derived from loans of
securities, gains from the sale of securities or of foreign currencies or other
income derived with respect to the Fund's business of investing in securities.
It is anticipated that any net gain realized from the closing out of futures or
options contracts will be considered qualifying income for purposes of the 90%
requirement.

Each Fund intends to distribute to shareholders annually any net capital gains
that have been recognized for federal income tax purposes (including unrealized
gains at the end of the Fund's fiscal year) on futures or options transactions.
Such distributions are combined with distributions of capital gains realized on
the Fund's other investments and shareholders are advised on the nature of the
distributions.

The foregoing is only a summary of certain material tax consequences affecting
each Fund and shareholders. Shareholders are advised to consult their own tax
advisers with respect to the particular tax consequences to them of an
investment in each Fund.

Determination of NAV

The following information supplements and should be read in conjunction with the
section in the Prospectus entitled Determining NAV.

The NAV per iShare of each Fund is computed by dividing the value of the net
assets of such Fund (i.e., the value of its total assets less total liabilities)
by the total number of iShares of such Fund outstanding, rounded to the nearest
cent. Expenses and fees, including without limitation, the management,
administration and distribution fees, are accrued daily and taken into account
for purposes of determining NAV. The NAV of per iShare for each Fund is

42
<PAGE>

calculated by IBT and determined as of the close of the regular trading session
on the NYSE (ordinarily 4:00 p.m., Eastern time) on each day that such exchange
is open.

In computing a Fund's NAV, the Fund's securities holdings are valued based on
their last quoted current price. Price information on listed securities is taken
from the exchange where the security is primarily traded. Securities regularly
traded in an over-the-counter market are valued at the latest quoted bid price
in such market. Other portfolio securities and assets for which market
quotations are not readily available are valued based on fair value as
determined in good faith by BGFA in accordance with procedures adopted by the
Board.

Dividends and Distributions

The following information supplements and should be read in conjunction with the
section in the Prospectus entitled Shareholder Information.

General Policies. Dividends from net investment income, if any, are declared
and paid at least annually by each Fund. Distributions of net realized
securities gains, if any, generally are declared and paid once a year, but the
Trust may make distributions on a more frequent basis for certain Funds. The
Trust reserves the right to declare special distributions if, in its reasonable
discretion, such action is necessary or advisable to preserve the status of each
Fund as a RIC or to avoid imposition of income or excise taxes on undistributed
income.

Dividends and other distributions on iShares are distributed, as described
below, on a pro rata basis to Beneficial Owners of such iShares. Dividend
payments are made through DTC Participants and Indirect Participants to
Beneficial Owners then of record with proceeds received from the Funds.

Dividend Reinvestment Service. No reinvestment service is provided by the
Trust. Broker-dealers may make available the DTC book-entry Dividend
Reinvestment Service for use by Beneficial Owners of Funds for reinvestment of
their dividend distributions. Beneficial Owners should contact their broker to
determine the availability and costs of the service and the details of
participation therein. Brokers may require Beneficial Owners to adhere to
specific procedures and timetables. If this service is available and used,
dividend distributions of both income and realized gains will be automatically
reinvested in additional whole iShares of the same Fund purchased in the
secondary market.

Performance and Other Information

The performance of the Funds may be quoted in advertisements, sales literature
or reports to shareholders in terms of average annual total return and
cumulative total return.

Quotations of average annual total return are expressed in terms of the average
annual rate of return of a hypothetical investment in a Fund over periods of 1,
5 and 10 years (or the life of a Fund, if shorter). Such total return figures
will reflect the deduction of a proportional share of such Fund's expenses on an
annual basis, and will assume that all dividends and distributions are
reinvested when paid.

Average annual total return is calculated according to the following formula:
P(1 + T)/n/ = ERV (where P = a hypothetical initial payment of $1,000, T = the
average annual total return, n = the number of years and ERV = the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
1, 5 or 10 year period or fractional portion).

43
<PAGE>

Quotations of a cumulative total return will be calculated for any specified
period by assuming a hypothetical investment in a Fund on the date of the
commencement of the period and will assume that all dividends and distributions
are reinvested on ex date. However, currently the Trust does not make a dividend
reinvestment option available to shareholders of iShares and such calculation is
provided for informational purposes only. The net increase or decrease in the
value of the investment over the period will be divided by its beginning value
to arrive at cumulative total return. Total return calculated in this manner
will differ from the calculation of average annual total return in that it will
not be expressed in terms of an average rate of return.

Quotations of cumulative total return or average annual total return reflect
only the performance of a hypothetical investment in a Fund during the
particular time period on which the calculations are based. Such quotations for
a Fund will vary based on changes in market conditions and the level of such
Fund's expenses, and no reported performance figure should be considered an
indication of performance that may be expected in the future.

The cumulative and average total returns do not take into account federal or
state income taxes which may be payable; total returns would, of course, be
lower if such charges were taken into account.

Whenever the Trust calculates total return using the market values of iShares as
reported by the Listing Exchange, it will also calculate a similar total return
using the relevant Fund's NAV. The Trust may also provide reported closing price
data for iShares and calculations of any applicable premiums or discounts
against NAV on its website and in the Trust prospectuses and annual reports.

A comparison of the quoted non-standard performance offered for various
investments is valid only if performance is calculated in the same manner.
Because there are different methods for calculating performance, investors
should consider the effects of the methods used to calculate performance when
comparing performance of a Fund with performance quoted with respect to other
investment companies or types of investments.

Because some or all of certain Fund's investments are denominated in foreign
currencies, the strength or weakness of the U.S. dollar as against these
currencies may account for part of such a Fund's investment performance.
Historical information on the value of the dollar versus foreign currencies may
be used from time to time in advertisements. Such historical information is not
indicative of future fluctuations in the value of the U.S. dollar against these
currencies. In addition, marketing materials may cite country and economic
statistics and historical stock market performance information for any of the
countries in which a Fund invests, including, but not limited to, the following:
population growth, gross domestic product, inflation rate, average stock market
price-earnings ratios and the total value of stock markets. Sources for such
statistics may include official publications of various foreign governments and
exchanges.

From time to time, in advertising and marketing literature, a Fund's performance
may be compared to the performance of broad groups of open-end and closed-end
investment companies with similar investment goals, as tracked by independent
organizations such as Investment Company Data, Inc., Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Morningstar, Inc., Value Line Mutual
Fund Survey and other independent organizations. When these organizations'
tracking results are used, a Fund will be compared to the appropriate fund
category, that is, by fund objective and portfolio holdings, or to the
appropriate volatility grouping, where volatility is a measure of a fund's risk.

In addition, in connection with the communication of its performance to current
or prospective shareholders, a Fund also may compare those figures to the
performance of certain unmanaged indices which may assume the reinvestment of
dividends or interest but generally do not reflect deductions for administrative
and management costs. Examples of such indices include, but are not limited to
the following:

44
<PAGE>

. Dow Jones Industrial Average
. Consumer Price Index
. Standard & Poor's 500 Composite Stock Price Index (S&P 500)
. NASDAQ OTC Composite Index
. NASDAQ Industrials Index
. International Finance Corporation's (Global) Composite and (Investable)
Composite Indices
. Morgan Stanley Capital International Indices
. NASDAQ Composite Index
. Wilshire 5000 Stock Index

Miscellaneous Information

Counsel. Morgan, Lewis & Bockius, LLP, Washington, D.C., is counsel to the
Trust.

Independent Auditors. PricewaterhouseCoopers LLP, located at 333 Market
Street, San Francisco, CA 94105, serve as the independent auditors and
accountants of the Trust. They audit the Funds' financial statements and perform
other related audit services.

45
<PAGE>

Other Information

Item 23 Exhibits

Exhibit Number Description

(a) Agreement and Declaration of Trust is incorporated
herein by reference to Post-Effective Amendment No.
2, filed May 12, 2000.

(b) Amended and Restated By-Laws is incorporated herein
by reference to Post-Effective Amendment No. 2, filed
May 12, 2000.

(d.1) Investment Advisory Agreement between the Trust and
Barclays Global Fund advisors is incorporated herein
by reference to Post-Effective Amendment No. 2, filed
May 12, 2000.

(d.2) Amended Schedule A to the Investment Advisory
Agreement between the Trust and Barclays Global Fund
Advisors for iShares S&P 100 Index Fund and iShares
S&P Global 100 Index Fund is incorporated herein by
reference to Post-Effective Amendment No. 6, filed
October 19, 2000.

(d.3) Amended Schedule A to the Investment Advisory
Agreement between the Trust and Barclays Global Fund
Advisors for iShares Cohen & Steers Realty Majors
Index Fund, iShares NASDAQ Biotechnology Index Fund,
iShares Goldman Sachs Technology Index Fund, iShares
Goldman Sachs Utilities Index Fund, iShares Goldman
Sachs Health Care Index Fund, iShares Goldman Sachs
Natural Resources Index Fund, iShares Goldman Sachs
Cyclical Industries Index Fund, iShares Goldman Sachs
Consumer Industries Index Fund and iShares Goldman
Sachs Financials Index Fund is filed herewith.

(e.1) Distribution Agreement between the Trust and
Investments Distribution Company is incorporated
herein by reference to Post-Effective Amendment No.
2, filed May 12, 2000.

(e.2) Amended Exhibit A to the Distribution Agreement
between the Trust and Investments Distribution
Company for iShares S&P 100 Index Fund and iShares
S&P Global 100 Index fund is incorporated herein by
reference to Post-Effective Amendment No. 6, filed
October 19, 2000.
<PAGE>

(e.3) Amended Exhibit A to the Distribution Agreement
between the Trust and Investments Distribution
Company for iShares Cohen & Steers Realty Majors
Index Fund, iShares NASDAQ Biotechnology Index Fund,
iShares Goldman Sachs Technology Index Fund, iShares
Goldman Sachs Utilities Index Fund, iShares Goldman
Sachs Health Care Index Fund, iShares Goldman Sachs
Natural Resources Index Fund, iShares Goldman Sachs
Cyclical Industries Index Fund, iShares Goldman Sachs
Consumer Industries Index Fund and iShares Goldman
Sachs Financials Index Fund is filed herewith.

(e.4) Form of Authorized Participant Agreement is
incorporated herein by reference to Post-Effective
Amendment No. 2, filed May 12, 2000.

(f) Not applicable

(g.1) Custodian Agreement between the Trust and Investors
Bank & Trust is incorporated herein by reference to
Post-Effective Amendment No. 2, filed May 12,
2000.

(g.2) Amended Appendix A to the Custodian Agreement between
the Trust and Investors Bank & Trust relating to
iShares S&P 100 Index Fund and iShares S&P Global 100
Index Fund filed is incorporated herein by reference
to Post-Effective Amendment No. 6, filed October 19,
2000.

(g.3) Amended Appendix A to the Custodian Agreement between
the Trust and Investors Bank & Trust for iShares
Cohen & Steers Realty Majors Index Fund, iShares
NASDAQ Biotechnology Index Fund, iShares Goldman
Sachs Technology Index Fund, iShares Goldman Sachs
Utilities Index Fund, iShares Goldman Sachs Health
Care Index Fund, iShares Goldman Sachs Natural
Resources Index Fund, iShares Goldman Sachs Cyclical
Industries Index Fund, iShares Goldman Sachs Consumer
Industries Index Fund and iShares Goldman Sachs
Financials Index Fund is filed herewith.

(g.4) Securities Lending Agency Agreement between Investors
Bank & Trust and the Trust is incorporated herein by
reference to Post-Effective Amendment No. 2, filed
May 12, 2000.

(g.5) Amended Schedule A to the Securities Lending Agency
Agreement between Investors Bank & Trust for iShares
S&P 100 Index Fund and iShares S&P Global 100 Index
Fund is incorporated herein by reference to
Post-Effective Amendment No. 6, filed October 19,
2000.
<PAGE>

(g.6) Amended Schedule A to the Securities Lending Agency
Agreement between Investors Bank & Trust for iShares
Cohen & Steers Realty Majors Index Fund, iShares
NASDAQ Biotechnology Index Fund, iShares Goldman
Sachs Technology Index Fund, iShares Goldman Sachs
Utilities Index Fund, iShares Goldman Sachs Health
Care Index Fund, iShares Goldman Sachs Natural
Resources Index Fund, iShares Goldman Sachs Cyclical
Industries Index Fund, iShares Goldman Sachs Consumer
Industries Index Fund and iShares Goldman Sachs
Financials Index Fund is filed herewith.

(g.7) Delegation Agreement between the Trust and Investors
Bank & Trust is incorporated herein by reference to
Post-Effective Amendment No. 2, filed May 12, 2000.

(h.1) Administration Agreement between the Trust and
Investors Bank & Trust is incorporated herein by
reference to the Post-Effective Amendment No. 2,
filed May 12, 2000.

(h.2) Amended Appendix A to the Administration Agreement
between the Trust and Investors Bank & Trust relating
to iShares S&P 100 Index Fund and iShares S&P Global
100 Index Fund is incorporated herein by reference to
Post-Effective Amendment No. 6, filed October 19,
2000.

(h.3) Amended Appendix A to the Administration Agreement
between the Trust and Investors Bank & Trust for
iShares Cohen & Steers Realty Majors Index Fund,
iShares NASDAQ Biotechnology Index Fund, iShares
Goldman Sachs Technology Index Fund, iShares Goldman
Sachs Utilities Index Fund, iShares Goldman Sachs
Health Care Index Fund, iShares Goldman Sachs Natural
Resources Index Fund, iShares Goldman Sachs Cyclical
Industries Index Fund, iShares Goldman Sachs Consumer
Industries Index Fund and iShares Goldman Sachs
Financials Index Fund is filed herewith.

(h.4) Transfer Agency and Service Agreement between the
Trust and Investors Bank & Trust is incorporated
herein by reference to Post-Effective Amendment No.
2, filed May 12, 2000.

(h.5) Amended Appendix A to the Transfer Agency and Service
Agreement between the and Investors Bank & Trust for
iShares S&P 100 Index Fund and iShares S&P Global 100
Index Fund is incorporated herein by reference to
Post-Effective Amendment No. 6, filed October 19,
2000.
<PAGE>

(h.6) Amended Appendix A to the Transfer Agency and Service
Agreement between the and Investors Bank & Trust for
iShares Cohen & Steers Realty Majors Index Fund,
iShares NASDAQ Biotechnology Index Fund, iShares
Goldman Sachs Technology Index Fund, iShares Goldman
Sachs Utilities Index Fund, iShares Goldman Sachs
Health Care Index Fund, iShares Goldman Sachs Natural
Resources Index Fund, iShares Goldman Sachs Cyclical
Industries Index Fund, iShares Goldman Sachs Consumer
Industries Index Fund and iShares Goldman Sachs
Financials Index Fund is filed herewith.

(h.7) Sublicense Agreement between Barclays Global
Investors, N.A. and the Trust for S&P Funds is
incorporated herein by reference to Post-Effective
Amendment No. 2, filed May 12, 2000.

(h.8) Sublicense Agreement between Barclays Global
Investors, N.A. and the Trust for Dow Jones Funds is
incorporated herein by reference to Post-Effective
Amendment No. 2, filed May 12, 2000.

(h.9) Sublicense Agreement between Barclays Global
Investors, N.A. and the Trust for Russell Funds is
incorporated herein by reference to Post-Effective
Amendment No. 2, filed May 12, 2000.

(h.10) Amended Exhibit A to the Sublicense Agreement between
Barclays Global Investors, N.A. and the Trust for S&P
Funds for iShares S&P 100 Index Fund and iShares S&P
Global 100 Index Fund is incorporated herein by
reference to Post-Effective Amendment No. 6, filed
October 19, 2000.

(h.11) Sublicense Agreement between Barclays Global
Investors, N.A. and the Trust for iShares Cohen &
Steers Realty Majors Index Fund, iShares NASDAQ
Biotechnology Index Fund, iShares Goldman Sachs
Technology Index Fund, iShares Goldman Sachs
Utilities Index Fund, iShares Goldman Sachs Health
Care Index Fund, iShares Goldman Sachs Natural
Resources Index Fund, iShares Goldman Sachs Cyclical
Industries Index Fund, iShares Goldman Sachs Consumer
Industries Index Fund and iShares Goldman Sachs
Financials Index Fund - to be filed by
amendment.

(i) Legal Opinion and Consent of Counsel is incorporated
herein by reference to Post-Effective Amendment No.
2, filed May 12, 2000.

(j.1) Not applicable

(j.2) Power of Attorney is incorporated herein by reference
to Post-Effective Amendment No. 2, filed May 12,
2000.

(k) Not applicable
<PAGE>

(l.1) Subscription Agreement between the Trust and SEI
Investments Distribution Company is incorporated
herein by reference to Post-Effective Amendment No.
2, filed May 12, 2000.

(l.2) Letter of Representations between the Trust and
Depository Trust Company is incorporated herein by
reference to Post-Effective Amendment No. 2, filed
May 12, 2000.

(1.3) Amendment of Letter of Representations between the
Trust and Depository Trust Company for iShares S&P
Global 100 Index Fund and iShares Cohen & Steers
Realty Majors Index Fund - to be filed by amendment.

(m) Not applicable

(n) Not applicable

(o) Not applicable

(p.i) iShares Trust Code of Ethics is incorporated herein
by reference to Post-Effective Amendment No. 2, filed
May 12, 2000.

(p.ii) Barclays Global Investors, N.A. Code of Ethics is
incorporated herein by reference to Post-Effective
Amendment No. 2, filed May 12, 2000.

(p.iii) SEI Investments Distribution Co. Code of Ethics is
incorporated herein by reference to exhibit (p)(11)
of the Arbor Fund's Post-Effective Amendment No. 28
to the Registration Statement on Form N-1A (File No.
33-42484) filed May 31, 2000.

Item 24 Persons Controlled By or Under Common Control with Registrant

None

Item 25 Indemnification

The Trust is organized as a Delaware business trust and is operated
pursuant to an Agreement and Declaration of Trust, (the "Declaration of Trust"),
that permits the Trust to indemnify its trustees and officers under certain
circumstances. Such indemnification, however, is subject to the limitations
imposed by the Securities Act of 1933, as amended, and the Investment Company
Act of 1940, as amended. The Declaration of Trust provides that officers and
trustees of the Trust shall be indemnified by the Trust against liabilities and
expenses incurred or paid in connection with any claim, action, suit, or
proceedings against them by reason of the fact that they each serve as an
officer or trustee of the Trust or as an officer or trustee of
<PAGE>

another entity at the request of the entity. This indemnification is subject to
the following conditions:

(a) no trustee or officer of the Trust is indemnified against any liability to
the Trust or its security holders that was the result of any willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office;

(b) officers and trustees of the Trust are indemnified only for actions taken in
good faith which the officers and trustees believed were in or not opposed to
the best interests of the Trust; and

The Declaration of Trust provides that if indemnification is not ordered by a
court, indemnification may be authorized upon determination by shareholders, or
by a majority vote of a quorum of the trustees who were not parties to the
proceedings or, if this quorum is not obtainable, if directed by a quorum of
disinterested trustees, or by independent legal counsel in a written opinion,
that the persons to be indemnified have met the applicable standard.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Trust pursuant to foregoing provisions, or otherwise, the Trust
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for Fund expenses incurred or paid by a director, officer or
controlling person of the Fund in the successful defense of any action, suit or
proceeding is asserted by such director, officer or controlling person in
connection with the securities being registered, the Trust will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

Item 26. (a) Business and Other Connections of Investment Adviser

The Trust is advised by Barclays Global Fund Advisors ("BGFA"), a wholly
owned subsidiary of Barclays Global Investors, N.A. ("BGI"), 45 Fremont Street,
San Francisco, CA 94105. BGFA's business is that of a registered investment
adviser to certain open-end, management investment companies and various other
institutional investors.

The directors and officers of BGFA consist primarily of persons who during
the past two years have been active in the investment management business. Each
of the directors and executive officers of BGFA will also have substantial
responsibilities as directors and/or officers of BGI. To the knowledge of the
Registrant, except as set forth below, none of the directors or executive
officers of BGFA is or has been at any time during the past two fiscal years
engaged in any other business, profession, vocation or employment of a
substantial nature.

Name and Position Principal Business(es) During the last Two Fiscal Years
<PAGE>

Patricia Dunn Director of BGFA and Chairman and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105

Garrett F. Bouton Chairman of the Board of Directors of BGFA and Chief
Chairman Operating Officer and Director of BGI
45 Fremont Street, San Francisco, CA 94105

Lawrence G. Tint Director of BGFA and Director of BGI
Director 45 Fremont Street, San Francisco, CA 94105

Geoffrey Fletcher Chief Financial Officer of BGFA and BGI
Chief Financial 45 Fremont Street San Francisco, CA 94105
Officer

Item 27 Principal Underwriters

(a) Furnish the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or
investment adviser.

Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor"), acts as distributor for:

SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI Institutional International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
The PBHG Funds, Inc. July 16, 1993
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Huntington Funds January 11, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
<PAGE>

First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
Alpha Select Funds January 1, 1998
Oak Associates Funds February 27, 1998
The Nevis Fund, Inc. June 29, 1998
CNI Charter Funds April 1, 1999
The Armada Advantage Fund May 1, 1999
Amerindo Funds Inc. July 13, 1999
Huntington VA Funds October 15, 1999
Friends Ivory Funds December 16, 1999
SEI Insurance Products Trust March 29, 2000
Pitcairn Funds August 1, 2000
First Omaha Funds, Inc. October 1, 2000
JohnsonFamily Funds, Inc. November 1, 2000

The Distributor provides numerous financial services to investment
managers, pension plan sponsors, and bank trust departments. These
services include portfolio evaluation, performance measurement and
consulting services ("Funds Evaluation") and automated execution, clearing
and settlement of securities transactions ("MarketLink").

(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in
the answer to Item 21 of Part B. Unless otherwise noted, the business
address of each director or officer is Oaks, PA 19456.

Position and Office Positions and Offices
Name with Underwriter with Registrant
---- ---------------- ---------------
<S> <C> <C>

Alfred P. West, Jr. Director, Chairman of the Board of Directors --
Richard B. Lieb Director, Executive Vice President --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Todd Cipperman Senior Vice President & General Counsel --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Kevin P. Robins Senior Vice President --
Patrick K. Walsh Senior Vice President --
Wayne M. Withrow Senior Vice President --
Robert Aller Vice President --
John D. Anderson Vice President & Managing Director --
</TABLE>
<PAGE>

<TABLE>
<S> <C> <C>
Timothy D. Barto ice President & Assistant Secretary --
S. Courtney E. Collier Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Richard A. Deak Vice President & Assistant Secretary --
Scott W. Dellorfano Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Scott C. Fanatico Vice President & Managing Director --
James R. Foggo Vice President & Assistant Secretary --
William E. Zitelli, Jr. Vice President & Assistant Secretary --
Vic Galef Vice President & Managing Director --
Steven A. Gardner Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary --
Greg Gettinger Vice President & Assistant Secretary --
Kathy Heilig Vice President --
Jeff Jacobs Vice President --
Samuel King Vice President --
John Kirk Vice President & Managing Director --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Paul Lonergan Vice President & Managing Director --
Ellen Marquis Vice President --
Christine M. McCullough Vice President & Assistant Secretary --
Carolyn McLaurin Vice President & Managing Director --
Mark Nagle Vice President --
Joanne Nelson Vice President --
Cynthia M. Parrish Vice President & Secretary --
Rob Redican Vice President --
Maria Rinehart Vice President --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President --
Lori L. White Vice President & Assistant Secretary --
</TABLE>

Item 28 Location of Accounts and Records

(a) The Fund maintains accounts, books and other documents required by Section
31(a) of the Investment Company Act of 1940 and the rules thereunder
(collectively, the "Records") at the offices of Investors Bank & Trust, 200
Clarendon Street, Boston, MA 02116.

(b) BGFA maintains all Records relating to its services as advisor at 45
Fremont Street, San Francisco, CA, 94105.

(c) SEI Investments Distributor Company maintains all Records relating to its
services as distributor at 1 Freedom Valley Drive, Oaks, PA 19456.
<PAGE>

(d) IBT maintains all Records relating to its services as transfer agent, fund
accountant and custodian at 200 Clarendon Street, Boston, MA 02116.

Item 29 Management Services.

Not applicable.

Item 30 Undertaking

Not applicable.
<PAGE>

Pursuant to the requirements of the Securities Act of 1933 and the Investment
company Act, the Registrant has duly caused this Post-Effective Amendment to the
Registration Statement to be signed on its behalf by the undersigned, duly
authorized, in the City of San Francisco and the State of California on the 22nd
day of November, 2000.

By: /s/ Nathan Most
________________________________
Nathan Most
President and
Treasurer

Pursuant to the requirements of the Securities Act, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacity and on the dates indicated.

By: /s/ Nathan Most
________________________________
Nathan Most
Trustee, President and Treasurer
Date: November 22, 2000

/s/ Richard K. Lyons*
______________________________
Richard K. Lyons
Trustee

/s/ George G. C. Parker*
______________________________
George G. C. Parker
Trustee

*By: /s/ W. John McGuire
______________________________
W. John McGuire
Attorney in fact
Date: November 22, 2000
<PAGE>

Exhibit Number Description

(a) Agreement and Declaration of Trust is incorporated herein by
reference to Post-Effective Amendment No. 2, filed May 12,
2000.

(b) Amended and Restated By-Laws is incorporated herein by
reference to Post-Effective Amendment No. 2, filed May 12,
2000.

(d.1) Investment Advisory Agreement between the Trust and Barclays
Global Fund advisors is incorporated herein by reference to
Post-Effective Amendment No. 2, filed May 12, 2000.

(d.2) Amended Schedule A to the Investment Advisory Agreement
between the Trust and Barclays Global Fund Advisors for
iShares S&P 100 Index Fund and iShares S&P Global 100 Index
Fund is incorporated herein by reference to Post-Effective
Amendment No. 6, filed October 19, 2000.

(d.3) Amended Schedule A to the Investment Advisory Agreement
between the Trust and Barclays Global Fund Advisors for
iShares Cohen & Steers Realty Majors Index Fund, iShares
NASDAQ Biotechnology Index Fund, iShares Goldman Sachs
Technology Index Fund, iShares Goldman Sachs Utilities Index
Fund, iShares Goldman Sachs Health Care Index Fund, iShares
Goldman Sachs Natural Resources Index Fund, iShares Goldman
Sachs Cyclical Industries Index Fund, iShares Goldman Sachs
Consumer Industries Index Fund and iShares Goldman Sachs
Financials Index Fund is filed herewith.

(e.1) Distribution Agreement between the Trust and Investments
Distribution Company is incorporated herein by reference to
Post-Effective Amendment No. 2, filed May 12, 2000.

(e.2) Amended Exhibit A to the Distribution Agreement between the
Trust and Investments Distribution Company for iShares S&P
100 Index Fund and iShares S&P Global 100 Index fund is
incorporated herein by reference to Post-Effective Amendment
No. 6, filed October 19, 2000.

(e.3) Amended Exhibit A to the Distribution Agreement between the
Trust and Investments Distribution Company for iShares Cohen
& Steers Realty Majors Index Fund, iShares NASDAQ
Biotechnology Index Fund, iShares Goldman Sachs Technology
Index Fund, iShares Goldman Sachs Utilities Index Fund,
iShares Goldman Sachs Health Care Index Fund, iShares Goldman
Sachs Natural Resources Index Fund, iShares Goldman Sachs
Cyclical Industries Index Fund, iShares Goldman Sachs
Consumer
<PAGE>

Industries Index Fund and iShares Goldman Sachs Financials
Index Fund is filed herewith.

(e.4) Form of Authorized Participant Agreement is incorporated
herein by reference to Post-Effective Amendment No. 2, filed
May 12, 2000.

(f) Not applicable

(g.1) Custodian Agreement between the Trust and Investors Bank &
Trust is incorporated herein by reference to Post-Effective
Amendment No. 2, filed May 12, 2000.

(g.2) Amended Appendix A to the Custodian Agreement between the
Trust and Investors Bank & Trust relating to iShares S&P 100
Index Fund and iShares S&P Global 100 Index Fund filed is
incorporated herein by reference to Post-Effective Amendment
No. 6, filed October 19, 2000.

(g.3) Amended Appendix A to the Custodian Agreement between the
Trust and Investors Bank & Trust for iShares Cohen & Steers
Realty Majors Index Fund, iShares NASDAQ Biotechnology Index
Fund, iShares Goldman Sachs Technology Index Fund, iShares
Goldman Sachs Utilities Index Fund, iShares Goldman Sachs
Health Care Index Fund, iShares Goldman Sachs Natural
Resources Index Fund, iShares Goldman Sachs Cyclical
Industries Index Fund, iShares Goldman Sachs Consumer
Industries Index Fund and iShares Goldman Sachs Financials
Index Fund is filed herewith.

(g.4) Securities Lending Agency Agreement between Investors Bank &
Trust and the Trust is incorporated herein by reference to
Post-Effective Amendment No. 2, filed May 12, 2000.

(g.5) Amended Schedule A to the Securities Lending Agency Agreement
between Investors Bank & Trust for iShares S&P 100 Index Fund
and iShares S&P Global 100 Index Fund is incorporated herein
by reference to Post-Effective Amendment No. 6, filed October
19, 2000.

(g.6) Amended Schedule A to the Securities Lending Agency Agreement
between Investors Bank & Trust for iShares Cohen & Steers
Realty Majors Index Fund, iShares NASDAQ Biotechnology Index
Fund, iShares Goldman Sachs Technology Index Fund, iShares
Goldman Sachs Utilities Index Fund, iShares Goldman Sachs
Health Care Index Fund, iShares Goldman Sachs Natural
Resources Index Fund, iShares Goldman Sachs Cyclical
Industries Index Fund, iShares Goldman Sachs Consumer
Industries Index Fund and iShares Goldman Sachs Financials
Index Fund is filed herewith.
<PAGE>

(g.7) Delegation Agreement between the Trust and Investors Bank &
Trust is incorporated herein by reference to Post-Effective
Amendment No. 2, filed May 12, 2000.

(h.1) Administration Agreement between the Trust and Investors Bank
& Trust is incorporated herein by reference to the Post-
Effective Amendment No. 2, filed May 12, 2000.

(h.2) Amended Appendix A to the Administration Agreement between
the Trust and Investors Bank & Trust relating to iShares S&P
100 Index Fund and iShares S&P Global 100 Index Fund is
incorporated herein by reference to Post-Effective Amendment
No. 6, filed October 19, 2000.

(h.3) Amended Appendix A to the Administration Agreement between
the Trust and Investors Bank & Trust for iShares Cohen &
Steers Realty Majors Index Fund, iShares NASDAQ Biotechnology
Index Fund, iShares Goldman Sachs Technology Index Fund,
iShares Goldman Sachs Utilities Index Fund, iShares Goldman
Sachs Health Care Index Fund, iShares Goldman Sachs Natural
Resources Index Fund, iShares Goldman Sachs Cyclical
Industries Index Fund, iShares Goldman Sachs Consumer
Industries Index Fund and iShares Goldman Sachs Financials
Index Fund is filed herewith.

(h.4) Transfer Agency and Service Agreement between the Trust and
Investors Bank & Trust is incorporated herein by reference to
Post-Effective Amendment No. 2, filed May 12, 2000.

(h.5) Amended Appendix A to the Transfer Agency and Service
Agreement between the and Investors Bank & Trust for iShares
S&P 100 Index Fund and iShares S&P Global 100 Index Fund is
incorporated herein by reference to Post-Effective Amendment
No. 6, filed October 19, 2000.

(h.6) Amended Appendix A to the Transfer Agency and Service
Agreement between the and Investors Bank & Trust for iShares
Cohen & Steers Realty Majors Index Fund, iShares NASDAQ
Biotechnology Index Fund, iShares Goldman Sachs Technology
Index Fund, iShares Goldman Sachs Utilities Index Fund,
iShares Goldman Sachs Health Care Index Fund, iShares Goldman
Sachs Natural Resources Index Fund, iShares Goldman Sachs
Cyclical Industries Index Fund, iShares Goldman Sachs
Consumer Industries Index Fund and iShares Goldman Sachs
Financials Index Fund is filed herewith.

(h.7) Sublicense Agreement between Barclays Global Investors, N.A.
and the Trust for S&P Funds is incorporated herein by
reference to Post-Effective Amendment No. 2, filed May 12,
2000.
<PAGE>

(h.8) Sublicense Agreement between Barclays Global Investors, N.A.
and the Trust for Dow Jones Funds is incorporated herein by
reference to Post-Effective Amendment No. 2, filed May 12,
2000.

(h.9) Sublicense Agreement between Barclays Global Investors, N.A.
and the Trust for Russell Funds is incorporated herein by
reference to Post-Effective Amendment No. 2, filed May 12,
2000.

(h.10) Amended Exhibit A to the Sublicense Agreement between
Barclays Global Investors, N.A. and the Trust for S&P Funds
for iShares S&P 100 Index Fund and iShares S&P Global 100
Index Fund is incorporated herein by reference to Post-
Effective Amendment No. 6, filed October 19, 2000.

(h.11) Sublicense Agreement between Barclays Global Investors, N.A.
and the Trust for iShares Cohen & Steers Realty Majors Index
Fund, iShares NASDAQ Biotechnology Index Fund, iShares
Goldman Sachs Technology Index Fund, iShares Goldman Sachs
Utilities Index Fund, iShares Goldman Sachs Health Care Index
Fund, iShares Goldman Sachs Natural Resources Index Fund,
iShares Goldman Sachs Cyclical Industries Index Fund, iShares
Goldman Sachs Consumer Industries Index Fund and iShares
Goldman Sachs Financials Index Fund - to be filed by
amendment.

(i) Legal Opinion and Consent of Counsel is incorporated herein
by reference to Post-Effective Amendment No. 2, filed May 12,
2000.

(j.1) Not applicable

(j.2) Power of Attorney is incorporated herein by reference to
Post-Effective Amendment No. 2, filed May 12, 2000.

(k) Not applicable

(l.1) Subscription Agreement between the Trust and SEI Investments
Distribution Company is incorporated herein by reference to
Post-Effective Amendment No. 2, filed May 12, 2000.

(l.2) Letter of Representations between the Trust and Depository
Trust Company is incorporated herein by reference to Post-
Effective Amendment No. 2, filed May 12, 2000.

(1.3) Amendment of Letter of Representations between the Trust and
Depository Trust Company for iShares S&P Global 100 Index
Fund and iShares Cohen & Steers Realty Majors Index Fund - to
be filed by amendment.
<PAGE>

(m) Not applicable

(n) Not applicable

(o) Not applicable

(p.i) iShares Trust Code of Ethics is incorporated herein by
reference to Post-Effective Amendment No. 2, filed May 12,
2000.

(p.ii) Barclays Global Investors, N.A. Code of Ethics is
incorporated herein by reference to Post-Effective Amendment
No. 2, filed May 12, 2000.

(p.iii) SEI Investments Distribution Co. Code of Ethics is
incorporated herein by reference to exhibit (p)(11) of the
Arbor Fund's Post-Effective Amendment No. 28 to the
Registration Statement on Form N-1A (File No. 33-42484) filed
May 31, 2000.