Barclays' Exchange Traded Funds Business Surpasses $100 Billion in U.S.; iShares Funds Experiencing Booming Growth, Outpacing Most Leading Fund Companies

Business Wire, Dec 10, 2004

SAN FRANCISCO -- Barclays Global Investors (BGI) announced today that the U.S. iShares(R) exchange traded funds family has surpassed $107 billion in assets. The iShares Funds have become the third fastest growing fund family in the U.S. as measured by net inflows in 2004.(1) Through November, iShares Funds have captured the bulk of this year's net new U.S. ETF assets, gathering nearly $40 billion in net new assets, which is 82% of the ETF market's net new assets. Total assets in iShares Funds have grown nearly 85% this year.(2)

Sixty percent of the iShares Funds' net inflow this year has been from retail investors who receive financial advice or are self-directed investors, a shift from previous years where institutions led the growth.(3) Meanwhile, the awareness level of ETFs by financial intermediaries in the U.S. is almost universal (compared to a 67% awareness level in 2000).(4) This surge in assets and awareness can be attributed to financial advisors and investors embracing iShares Funds' benefits, such as a broad product line, large institutional-level portfolio management, and access to a piece of the securities market that tracks a well-known index in a single trade.(5)

Since U.S. iShares ETFs were introduced by BGI in May 2000, the fund family has become the leader in ETF markets around the world. Its U.S. unit reaching $107 billion in 4 1/2 years is remarkable compared to the 55 years it took the U.S. mutual fund industry to reach $94.5 billion in 1979(6) and the nine years the U.S. ETF industry needed to gather $100 billion in assets in 2002.(7) In fact, iShares Funds have become the 8th largest U.S. mutual fund family in less than 5 years.(8)

"iShares Funds' explosive growth, during a bear market no less, is a clear indicator that iShares Funds offers numerous types of investors with a way to thoughtfully construct portfolios," says Lee Kranefuss, CEO of BGI's Intermediary and ETF Business. "With the growing number of investors around the world demanding innovative, efficient investment products, BGI created iShares Funds, which successfully leveraged BGI's global expertise in index management for pension plans to a broader group of investors."

Scott Kubie, CFA, President of Clarke Lanzen Skalla Investment Firm, LLC, a money management firm located in Omaha, Neb., says, "iShares Funds are the superior ETF fund family of choice. We use iShares Funds as core portfolio holdings because we can execute precise portfolio asset allocations with iShares' comprehensive line-up of equity and fixed income ETFs. In addition, iShares ETFs are liquid and cost efficient, and we can see their underlying holdings at any point during a given day." This may not represent the experience of other clients and is not indicative of future performance.

Asset growth has been across the entire iShares Funds family (25 iShares have more than $1 billion in assets(9)), yet certain iShares Funds have experienced unprecedented growth. For example, the iShares Dow Jones Select Dividend Index Fund (ticker:DVY) has grown from $460 million to $4.8 billion this year, the iShares MSCI EAFE Fund (ticker:EFA) grew 135% to $12.7 billion and the iShares MSCI Emerging Markets Fund (ticker:EEM) grew 218% to $3.5 billion.

"As the job of most portfolio managers has become broader and deeper, covering all the developed and emerging markets as well as looking at sectors, we have found that many are admitting that they cannot add value in all markets and are beginning to embrace ETFs covering international markets so that they can pick stocks in the markets that they feel can add value," writes Deborah Fuhr, ETF Strategist at Morgan Stanley, in Morgan Stanley's "ETFs End of Third Quarter 2004 Review."

The iShares(R) Funds are investment company shares that are bought and sold like common stocks on securities exchanges. The iShares Funds are attractive to many individual and institutional investors and financial intermediaries because of their relative low cost, tax efficiency and trading flexibility. Investors can purchase and sell shares through any brokerage firm, financial advisor, or online broker, and hold the funds in any type of brokerage account. To determine if the fund(s) are an appropriate investment for you, carefully consider the funds' investment objectives, risk factors and charges and expenses before investing. This and other information can be found in the funds' prospectuses, which may be obtained by calling 1-800-iShares or by visiting www.ishares.com. Read the prospectus carefully before investing.

Barclays Global Investors is one of the world's largest asset managers(10) providing structured investment strategies such as risk-controlled active strategies and indexing. In the U.S., BGI is one of the largest active managers,(11) set apart by its risk-controlled approach. BGI managed U.S. $1.19 trillion in assets as of 9/30/04, and over 2,300 funds for more than 2,500 clients in 47 countries around the world. BGI is an innovator in investment management, applying science and technology to the investment process. BGI is owned by Barclays PLC.