File No. 333-84788
1940 Act File No. 811-21057

As filed with the Securities and Exchange Commission
on November 8, 2002

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

AMENDMENT NO. 2 to
FORM S-6

FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2

A. Exact name of Trust:

BLDRS INDEX FUNDS TRUST
BLDRS ASIA 50 ADR INDEX FUND
BLDRS DEVELOPED MARKETS 100 ADR INDEX FUND
BLDRS EMERGING MARKETS 50 ADR INDEX FUND
BLDRS EUROPE 100 ADR INDEX FUND

B. Name of Depositor:

Nasdaq Financial Products Services, Inc.

C. Complete address of Depositor's principal executive office:

Nasdaq Financial Products Services, Inc.
9513 Key West Avenue
Rockville, MD 20850

D. Name and complete address of agent for service:

John L. Jacobs
Nasdaq Financial Products Services, Inc.
9513 Key West Avenue
Rockville, MD 20850

Copy to:
Mary Joan Hoene
Carter, Ledyard & Milburn
2 Wall Street
New York, New York 10005

E. Title and amount of securities being registered:

An indefinite number of units of Beneficial Interest pursuant
to Rule 24f-2 under the Investment Company Act of 1940.

F. Proposed maximum aggregate offering price to the public of the
securities being registered:

Indefinite.

G. Amount of filing fee:

None required pursuant to Rule 24f-2.

H. Approximate date of proposed sale to public:

AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT.

/ / Check box if it is proposed that this filing will become effective
on , 2002 at 3:00 p.m. pursuant to Rule 487.

BLDRS INDEX FUNDS TRUST
Cross Reference Sheet
Pursuant to Regulation C
Under the Securities Act of 1933, as amended

(Form N-8B-2 Items required by Instruction 1
as to Prospectus in Form S-6)

Form N-8B-2 Form S-6
Item Number Heading in Prospectus
- ------------- ---------------------

I. Organization and General Information

1. (a) Name of Trust............... Prospectus Front Cover
(b) Title of securities issued.. Prospectus Front Cover

2. Name, address and Internal
Revenue Service Employer
Identification Number of
depositor....................... The Sponsor

3. Name, address and Internal
Revenue Service Employer
Identification Number of
trustee......................... The Trustee

4. Name, address and Internal
Revenue Service Employer
Identification Number
of principal underwriter........ *

5. State of organization of Trust.. Creation and Redemption of Shares

6. (a) Dates of execution and
termination of Trust
Agreement................... Essential Information;
Termination of a Fund
(b) Dates of execution and
termination of Trust
Agreement................... Same as set forth in 6(a)

* Not applicable, answer negative or not required.

7. Changes of name................. *

8. Fiscal Year..................... *

9. Material Litigation............. *

* Not applicable, answer negative or not required.

II. General Description of the Trust
and Securities of the Trust

10. (a) Registered or bearer
securities.................. The Funds

(b) Cumulative or distributive.. Essential Information;
Distributions to Beneficial Owners

(c) Rights of holders as to
withdrawal or redemption.... Creation and Redemption of Shares;
Book-Entry Only; Notices and
Distributions

(d) Rights of holders as to
conversion, transfer, etc... Creation and Redemption of
Shares;Book-Entry Only; Notices
and Distributions

(e) Lapses or defaults in
principal payments with
respect to periodic payment
plan certificates........... *

(f) Voting rights............... Amendments to the Trust Agreement;
Termination of a Fund; The Trustee

(g) Notice to holders as to
change in:

(1) Composition of Trust
assets.................. *

(2) Terms and conditions
of Trust's securities... Amendments to the Trust Agreement
and Indenture

(3) Provisions of Trust
Agreement............... Same as set forth in 10(g)(2)

(4) Identity of depositor
and trustee............. The Trustee; The Sponsor

* Not applicable, answer negative or not required.

(h) Consent of holders required to change:

(1) Composition of Trust
assets................... *

(2) Terms and conditions
of Trust's securities.... Amendments to the Trust Agreement and
Indenture

(3) Provisions of Trust
Agreement................ Same as set forth in 10(h)(2)

(4) Identity of depositor
and trustee.............. The Sponsor; The Trustee

(i) Other principal
features of the securities... The Funds

11. Type of securities
comprising units................. The Prospectus - Front Cover; The
Funds; The Portfolios; Creation and
Redemption of Shares

12. Certain information regarding
securities comprising periodic
payment certificates............. *

13. (a) Certain information regarding
loads, fees, expenses
and charges.................. Creation And Redemption of Shares;
Expenses of a Fund

(b) Certain information regarding
periodic payment plan
certificates................. *

(d) Reasons for certain
differences in prices........ *

(e) Certain other loads, fees, or
charges payable by holders... *

* Not applicable, answer negative or not required.

(f) Certain profits receivable
by depositor, principal
underwriters, custodian,
trustee or affiliated
persons...................... The Portfolios

(g) Ratio of annual charges and
deductions to income......... *

14. Issuance of Trust's securities... The Funds; Book-Entry Only; Notices and
Distributions

15. Receipt and handling of
payments from purchasers......... The Funds; Creation and Redemption of
Shares

16. Acquisition and disposition of
underlying securities............ The Funds; Creation and Redemption of
Shares; The Portfolios

17. (a) Withdrawal or redemption by
holders...................... The Funds; Creation and Redemption of
Shares; The Portfolios

(b) Persons entitled or required
to redeem or repurchase
securities................... Same as set forth in 17(a)

18. (a) Receipt, custody and
disposition of income........ Distributions to Beneficial Owners

(b) Reinvestment of distribu-
tions........................ *

(d) Schedule of distributions.... *

* Not applicable, answer negative or not required.

19. Records, accounts and reports.. Distribution to Benficial Owners;
Expenses of a Fund; Book-Entry Only;
Notices and Distributions

20. Certain miscellaneous provi-
sions of Trust Agreement

(a) Amendments................. Amendments to the Trust Agreement and
Indenture

(b) Extension or termination... Amendments to the Trust Agreement and
Indenture

(d) Successor trustee.......... Same as set forth in 20(c)

(e) Removal or resignation of
depositor.................. The Sponsor

(f) Successor depositor........ Same as set forth in 20(e)

21. Loans to security holders...... *

22. Limitations on liabilities..... The Trustee; The Sponsor

23. Bonding arrangements........... *

24. Other material provisions of
Trust Agreement................ *

* Not applicable, answer negative or not required.

III. Organization, Personnel and
Affiliated Persons of Depositor

25. Organization of depositor...... The Sponsor

26. Fees received by depositor..... *

27. Business of depositor.......... The Sponsor

28. Certain information as to
officials and affiliated
persons of depositor........... The Sponsor

29. Ownership of voting securities
of depositor................... The Sponsor

30. Persons controlling depositor.. *

31. Payments by depositor for
certain services rendered
to Trust....................... *

32. Payments by depositor for
certain other services
rendered to Trust.............. *

33. Remuneration of employees of
depositor for certain
services rendered to Trust..... *

34. Compensation of other persons
for certain services rendered
to Trust....................... *

* Not applicable, answer negative or not required.

IV. Distribution and Redemption of Securities

35. Distribution of Trust's
securities in states........... Continuous offering of Shares

36. Suspension of sales of Trust's
securities..................... *

37. Denial or revocation of
authority to distribute........ *

38. (a) Method of distribution..... Creation and Redemption of Shares
of Creation Units; Continuous
Offering of Shares; The Funds;
Book-Entry Only; Notices and
Distributions

(b) Underwriting agreements.... Continuous Offering of Shares;
Creation and Redemption of Shares

39. (a) Organization of principal
underwriter................ The Sponsor

(b) NASD membership of
principal underwriter...... The Sponsor

40. Certain fees received by
principal underwriters......... *

41. (a) Business of principal
underwriters............... Continuous Offering of Shares

(b) Branch offices of
principal underwriters..... *

42. Ownership of Trust's securities
by certain persons............. *

* Not applicable, answer negative or not required.

43. Certain brokerage commissions
received by principal
underwriters................... *

44. (a) Method of valuation for
determining offering price. The Portfolios; Determination of
Net Asset Value

(b) Schedule as to components of
offering price............. *

45. Suspension of redemption
rights......................... *

46. (a) Certain information
regarding redemption or
withdrawal valuation....... Determination of Net Asset Value;
Creation and Redemption of Shares

(b) Schedule as to components
of redemption price........ *

47. Maintenance of position in
underlying securities.......... The Funds; The Portfolios;
Continuous Offering of Shares;
Determination of Net Asset Value;
Distributions to Beneficial Owners

* Not applicable, answer negative or not required.

V. Information Concerning the Trustee or Custodian

48. Organization and regulation of
trustee........................ The Trustee

49. Fees and expenses of trustee... Expenses of a Fund; Creation and
Redemption of Shares

50. Trustee's lien................. Expenses of a Fund; Creation and
Redemption of Shares

* Not applicable, answer negative or not required.

VI. Information Concerning Insurance of Holders of Securities

51. (a) Name and address of
insurance company........... *

(b) Types of policies........... *

(d Coverage.................... *

(e) Beneficiaries............... *

(f) Terms and manner of
cancellation................ *

(g) Method of determining
premiums.................... *

(h) Aggregate premiums paid..... *

(i) Recipients of premiums...... *

(j) Other material provisions
of Trust Agreement relating
to insurance................ *

* Not applicable, answer negative or not required.

VII. Policy of Registrant

52. (a) Method of selecting and
eliminating securities from
the Trust................... The Funds; The Portfolios;
Creation and Redemption of Shares;
Determination of the Portfolio
Deposit

(b) Elimination of securities
from the Trust.............. *

(d) Description of any other
fundamental policy of the
Trust....................... *

53. (a) Taxable status of the Trust. Tax Status of the Trust

(b) Qualification of the Trust
as a regulated investment
company..................... Same as set forth in 53(b)

* Not applicable, answer negative or not required.

VIII. Financial and Statistical Information

54. Information regarding the
Trust's last ten fiscal years... *

55. Certain information regarding
periodic payment plan certifi-
cates........................... *

56. Certain information regarding
periodic payment plan certifi-
cates........................... *

57. Certain information regarding
periodic payment plan certifi-
cates........................... *

58. Certain information regarding
periodic payment plan certifi-
cates........................... *

59. Financial statements
(Instruction 1(c) to Form S-6).. *

* Not applicable, answer negative or not required.

Undertaking to File Reports

Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulations of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.

C-1

PROSPECTUS

[BLDRS LOGO]

BLDRS ASIA 50 ADR INDEX FUND
BLDRS DEVELOPED MARKETS 100 ADR INDEX FUND
BLDRS EMERGING MARKETS 50 ADR INDEX FUND
BLDRS EUROPE 100 ADR INDEX FUND

NOVEMBER 8, 2002

---------------------

The BLDRS Index Funds Trust ("Trust") is a unit investment trust consisting
of four (4) separate investment portfolios (each a "BLDRS Index Fund" or a
"Fund" and collectively the "BLDRS Index Funds" or the "Funds"). The investment
objective of each Fund is to provide investment results that correspond
generally, before fees and expenses, to the price and yield performance of
publicly traded Depositary Receipts in a particular geographic region or market
represented by a specified relevant benchmark index compiled and published by
The Bank of New York (each a "BNY ADR Index"). Nasdaq Financial Products
Services, Inc. is the Sponsor of the Trust and the Funds and The Bank of New
York is the Trustee.

The units of beneficial interest of each Fund ("Shares") are listed on The
Nasdaq Stock Market, Inc. ("NASDAQ"). The Shares trade on NASDAQ at market
prices that may differ to some degree from the Shares' net asset value. Each
Fund issues and redeems Shares on a continuous basis -- at net asset
value -- only in a multiple of 50,000 Shares called a "Creation Unit,"
principally in-kind for securities included in the relevant benchmark BNY ADR
Index. EXCEPT WHEN AGGREGATED IN CREATION UNITS, SHARES ARE NOT REDEEMABLE
SECURITIES OF A FUND.

Shares of each Fund are not guaranteed or insured by The Federal Deposit
Insurance Corporation or any other agency of the U.S. government, nor are Shares
deposits or obligations of any bank. Shares involve investment risks, including
the loss of principal.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

SPONSOR: NASDAQ FINANCIAL PRODUCTS SERVICES, INC.
(which is owned by The Nasdaq Stock Market, Inc.)

"BLDRS" and "Baskets of Listed Depositary ReceiptS" are service marks of
The Bank of New York

TABLE OF CONTENTS

<Table>

ESSENTIAL INFORMATION AS OF
NOVEMBER 7, 2002................ ii
THE FUNDS......................... 1
THE FUNDS, INDEXES AND TICKER
SYMBOLS......................... 2
RISKS OF INVESTING IN THE FUNDS... 3
General Risks................... 3
Risk Factors Specific to Each
Fund.......................... 6
REPORT OF INDEPENDENT AUDITORS.... 9
FEES AND EXPENSES................. 24
INDEX PERFORMANCE HISTORY......... 26
CREATION AND REDEMPTION OF
SHARES.......................... 29
Creation or Redemption of Shares
Through the Clearing
Process....................... 30
Creation and Redemption of
Shares Outside the Clearing
Process....................... 32
Redemptions Will Be Subject to
Applicable Laws............... 33
Creation and Redemption
Transaction Fee............... 33
THE PORTFOLIOS.................... 34
DETERMINATION OF NET ASSET
VALUE........................... 38
DETERMINATION OF THE PORTFOLIO
DEPOSIT......................... 38
DISTRIBUTIONS TO BENEFICIAL
OWNERS.......................... 40
EXPENSES OF A FUND................ 41
BOOK-ENTRY ONLY; NOTICES AND
DISTRIBUTIONS................... 44
BUYING AND SELLING SHARES; TRADING
INFORMATION..................... 46
AMENDMENTS TO THE TRUST AGREEMENT
AND INDENTURE................... 47
TERMINATION OF A FUND............. 48
CERTAIN MATERIAL FEDERAL INCOME
TAX MATTERS..................... 49
ERISA Considerations............ 52
THE TRUSTEE....................... 53
Trustee Fee Scale............... 54
THE SPONSOR....................... 55
INDEX LICENSE..................... 56
SELECTION CRITERIA, CONSTRUCTION
AND MAINTENANCE STANDARDS FOR
THE BNY ADR INDEXES............. 57
BNY ADR INDEX CALCULATION AND
DISSEMINATION................... 60
THE BNY ASIA 50 ADR
INDEX......................... 60
THE BNY DEVELOPED MARKETS 100
ADR INDEX..................... 64
THE BNY EMERGING MARKETS 50 ADR
INDEX......................... 68
THE BNY EUROPE 100 ADR INDEX.... 71
ADDITIONAL INFORMATION CONCERNING
THE ROLE OF THE BANK OF NEW
YORK, DOW JONES AND NASDAQ...... 76
CAPITAL STOCK AND SHAREHOLDER
REPORTS......................... 77
RESTRICTIONS ON PURCHASES BY
INVESTMENT
COMPANIES....................... 78
CONTINUOUS OFFERING OF SHARES..... 78
PERFORMANCE AND OTHER
INFORMATION..................... 79
CODE OF ETHICS.................... 82
LEGAL OPINION..................... 83
INDEPENDENT AUDITORS.............. 83
ADDITIONAL INFORMATION............ 83
GLOSSARY OF DEFINED
TERMS........................... 84
</Table>

ESSENTIAL INFORMATION AS OF NOVEMBER 7, 2002*

<Table>
<Caption>
FRACTIONAL UNDIVIDED
NUMBER INTEREST REPRESENTED NET ASSET VALUE
OF SHARES BY EACH SHARE PER SHARE SYMBOL CUSIP
--------- -------------------- --------------- ------ ---------

BLDRS Asia 50 ADR
Index Fund: 400,000 1/400,000 $48.76 ADRA 09348R102
BLDRS Developed
Markets 100 ADR
Index Fund: 400,000 1/400,000 $45.05 ADRD 09348R201
BLDRS Emerging
Markets 50 ADR
Index Fund: 400,000 1/400,000 $50.55 ADRE 09348R300
BLDRS Europe 100 ADR
Index Fund: 400,000 1/400,000 $44.95 ADRU 09348R409
</Table>

<Table>

Glossary: All defined terms used in this Prospectus
and page numbers on which their definitions
appear are listed in the Glossary on page
76.
Sponsor: Nasdaq Financial Products Services, Inc.
Distributor: ALPS Distributors, Inc.
Trustee: The Bank of New York
Licensor: The Bank of New York
Depository: The Depository Trust Company ("DTC")
Trust Agreement and Indenture: Dated November 8, 2002 by and between the
Sponsor and the Trustee.*
Beneficial Owner: Owners of beneficial interests in Shares
are referred to herein as "Beneficial
Owners".
Record Dates: Quarterly, currently anticipated to be the
Second (2nd) Business Day after the third
(3rd) Friday in each of March, June,
September and December.**
Dividend Payment Dates: Quarterly, on the last Business Day of
April, July, October and January.**
Fiscal Year: September 30
Estimated Ordinary Operating
Expenses of Each Fund: 30/100th of one percent (inclusive of
Trustee's annual fee of 6/100th of one
percent to 10/100th of one percent) of the
net asset value ("NAV") of the relevant
Fund.***
Valuation Time: Closing time of the regular trading session
on NASDAQ (ordinarily 4:00 p.m. New York
time).
Business Day: Any day on which NASDAQ is open for
business.
</Table>

<Table>

Mandatory Termination Date: The maturity, redemption, sale or other disposition,
as the case may be, of the last security held by a
Fund.
Discretionary Termination: A Fund may be terminated if within 90 days from the
initial Portfolio Deposit the net worth of the Fund
falls below $100,000; (ii) if at any time after 90
days following the initial Portfolio Deposit the NAV
of the Fund falls below $150,000,000; or (iii) if at
any time after three (3) years following the initial
Portfolio Deposit such value is less than
$350,000,000, adjusted for inflation.****
Calculation of the Composition of
the Portfolio Deposit for Creation
Units: The Trustee, through the National Securities Clearing
Corporation ("NSCC"),***** makes available on each
Business Day, immediately prior to the opening of
business on NASDAQ (currently 9:30 a.m., New York
time), the list of the names and the required number
of shares of each of the securities comprising a
Fund's relevant BNY ADR Index (each an "Index
Security") to be included in the current Portfolio
Deposit (based on information at the end of the
previous Business Day) for each Fund. Such Portfolio
Deposit is applicable, subject to any adjustments, in
order to effect creations and redemptions of Creation
Units of a given Fund until such time as the
next-announced composition of the Portfolio Deposit
is made available.
Modification to the Trust
Agreement and Indenture: The Trust Agreement and Indenture for each Fund may
be modified unilaterally by the Sponsor to effect
certain changes, and may be otherwise modified by a
vote of the Beneficial Owners of the outstanding
Shares of the relevant Fund under certain
circumstances.
</Table>

iii

- ---------------

* The Trust Agreement and Indenture has become effective and the initial
deposit for each Fund has been made on November 8, 2002 ("Initial Date of
Deposit").

** See "Distributions to Beneficial Owners".
*** See "The Trustee".
**** A Fund may also be terminated under other circumstances. See "Termination
of a Fund".
***** As of December 31, 2001, the National Association of Securities Dealers,
Inc. ("NASD") beneficially owned (including shares owned directly by the
American Stock Exchange, LLC ("AMEX") approximately 8.8% of the issued
and outstanding shares of common stock of The Depository Trust & Clearing
Corporation ("DTCC"), the parent company of NSCC and DTC, and the NASD
owned 10,000 shares of preferred stock of DTCC, which entitles the NASD
to elect one director of DTCC. The NASD is currently the majority owner
of NASDAQ. Also as of such date, the Trustee and its affiliates together
owned approximately 5.8% of the issued and outstanding shares of the
common stock of DTCC.

THE FUNDS

Each Fund is an "index fund" that holds publicly-traded Depositary Receipts
of non-U.S. companies in a particular geographic region or market represented by
a specified relevant benchmark BNY ADR Index. The Shares of each Fund represent
an undivided interest in the portfolio of Depositary Receipts held by each Fund.
The Shares of each Fund are separate from the underlying securities that are
represented by the Shares. Each Fund seeks to provide investment results that
correspond generally, before fees and expenses, to the price and yield
performance of its relevant benchmark BNY ADR Index. Each BNY ADR Index is
developed by the Licensor from a universe of Depositary Receipts defined by The
Bank of New York ADR Index(SM) ("BNY ADR Composite Index"). Dow Jones & Company,
Inc. ("Dow Jones") acts as "index calculation agent" in connection with the
calculation and dissemination of each BNY ADR Index and the free-float adjusted
market capitalization methodology of Dow Jones is employed. See "Selection
Criteria, Construction and Maintenance Standards for the BNY ADR Indexes."

Depositary Receipts are negotiable U.S. securities that generally represent
a non-U.S. company's publicly traded equity or debt. Depositary Receipts are
created when a broker purchases the non-U.S. company's shares on that company's
home stock market and delivers those shares to the depository's local custodian
bank, which then instructs the depository bank, such as The Bank of New York, to
issue Depositary Receipts. Depositary Receipts may also be purchased in the U.S.
secondary trading market. Depositary Receipts may trade freely, just like any
other security, either on an exchange, NASDAQ or in the over-the-counter market
and can be used to raise capital.

Indexing is an investment strategy for tracking, as closely as possible,
the performance of a specified market benchmark, or "index". An index is an
unmanaged group of securities whose overall performance is used as a standard to
measure the investment performance of a particular market. There are many types
of indexes. Some represent entire markets -- such as a U.S. or foreign country
stock market. Other indexes cover market segments such as small-capitalization
stocks or long-term bonds, or particular industries. An index fund holds all, or
a representative sample, of the securities that make up its target index. Unlike
actively managed funds, index (or "passively managed") funds do not buy and sell
securities based on research and analysis. Rather, index funds simply attempt to
mirror what the target index does, for better or worse. An index fund does not
always perform exactly like its target index. Like all investment companies,
index funds have operating expenses and transaction costs. Market indexes do
not, and therefore will usually have a slight performance advantage over funds
that track them.

The Funds are designed for investors seeking a relatively low cost approach
to investing and may be suitable for long-term investment in the market or
market segment represented in the relevant benchmark BNY ADR Index. Shares of
each Fund may also be used as an asset allocation tool or as a speculative
trading
1

instrument. The Shares have been designed to be tradable in a secondary market
on NASDAQ on an intraday basis in lots of any size and to be created and
redeemed principally in-kind in Creation Units at each day's next calculated
NAV. The Funds utilize a low cost "passive" or "indexing" investment approach to
attempt to approximate the investment performance of their relevant benchmark
BNY ADR Indexes.

The Shares provide investors with a security whose initial market value
should approximate 1/15th the value of the relevant benchmark BNY ADR Index.
Thus, for example, if the BNY ADR Index were at 750, investors might expect a
Share to trade at approximately $50. Note, however, that the market price of a
Share should also reflect its share of any current and undistributed dividends
accumulated on the securities in such Fund's portfolio and may also be affected
by supply and demand, market volatility, sentiment and other factors. Therefore,
over time, the market value of a Share may not approximate 1/15th the value of
its relevant benchmark BNY ADR Index.

This prospectus provides information about the four Funds. The BLDRS Asia
50 ADR Index Fund seeks to track The BNY Asia 50 ADR Index(SM); The BLDRS
Developed Markets 100 ADR Index Fund seeks to track The BNY Developed Markets
100 ADR Index(SM); The BLDRS Emerging Markets 50 ADR Index Fund seeks to track
The BNY Emerging Markets 50 ADR Index(SM); and The BLDRS Europe 100 ADR Index
Fund seeks to track The BNY Europe 100 ADR Index(SM). Each Fund will normally
hold at least 95% of its total assets in Depositary Receipts that comprise its
relevant benchmark BNY ADR Index, and will seek to correspond generally, before
fees and expenses, to the price and yield performance, of its relevant benchmark
BNY ADR Index.

THE FUNDS, INDEXES AND TICKER SYMBOLS

BLDRS ASIA 50 ADR INDEX FUND (SYMBOL: ADRA)

The BNY Asia 50 ADR Index includes 50 component Depositary Receipts as of
September 30, 2002 representing the securities issued by 50 of the most actively
traded companies from the Asian market having a free-float market capitalization
ranging from $1 billion to $90 billion.

BLDRS DEVELOPED MARKETS 100 ADR INDEX FUND (SYMBOL: ADRD)

The BNY Developed Markets 100 ADR Index includes 100 component Depositary
Receipts as of September 30, 2002 representing the securities issued by 100 of
the most actively traded companies from international developed markets having a
free-float market capitalization ranging from $5 billion to over $100 billion.

BLDRS EMERGING MARKETS 50 ADR INDEX FUND (SYMBOL: ADRE)

The BNY Emerging Markets 50 ADR Index includes 50 component Depositary
Receipts as of September 30, 2002 representing the securities issued by 50 of
the most actively traded companies from the international and emerging markets
having a free-float market capitalization ranging from approximately $900
million to $20 billion.

BLDRS EUROPE 100 ADR INDEX FUND (SYMBOL: ADRU)

The BNY Europe 100 ADR Index includes 100 component Depositary Receipts as
of September 30, 2002 representing the securities issued by 100 of the most
actively traded companies from the European market having a free-float market
capitalization ranging from $1 billion to over $100 billion.

RISKS OF INVESTING IN THE FUNDS

GENERAL RISKS

Depositary Receipts. Each Fund holds the securities of non-U.S. companies
in the form of Depositary Receipts. Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. American Depositary Receipts ("ADRs") are receipts typically
issued by an American bank or trust company that evidence ownership of
underlying securities issued by a foreign corporation. New York shares are
typically issued by a company incorporated in the Netherlands and represent a
direct interest in the company. Unlike traditional Depositary Receipts, New York
share programs do not involve custody of the Dutch shares of the company. Global
Depositary Receipts ("GDRs") are receipts issued throughout the world that
evidence a similar arrangement. ADRs and GDRs trade in foreign currencies that
differ from the currency the underlying security for each ADR or GDR principally
trades in. ADRs, GDRs and New York shares are collectively referred to as
"Depositary Receipts". Generally, ADRs, and New York shares in registered form,
are designed for use in the U.S. securities markets. GDRs, in registered form,
are tradable both in the United States and in Europe and are designed for use
throughout the world. A Fund may hold unsponsored Depositary Receipts. The
issuers of unsponsored Depositary Receipts are not obligated to disclose
material information in the United States; therefore, there may be less
information available regarding such issuers and there may not be a correlation
between such information and the market value of the Depositary Receipts.

Equity Risk. An investment in a Fund should 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 securities held by a Fund ("Fund Securities") and
thus in the value of Shares). Equity securities and therefore Depositary
Receipts

are susceptible to general stock market fluctuations and to volatile increases
and decreases in value as market confidence in and perceptions of their issuers
change. These investor perceptions are based on various 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 and banking crises.

Currency Risk. The underlying securities of the Depositary Receipts in a
Fund's portfolio are usually denominated or quoted in currencies other than the
U.S. dollar. Changes in foreign currency exchange rates affect the value of a
Fund's portfolio. Generally, when the U.S. dollar rises in value against a
foreign currency, a security denominated in that currency loses value because
the currency is worth fewer U.S. dollars. Conversely, when the U.S. dollar
decreases in value against a foreign currency, a security denominated in that
currency gains value because the currency is worth more U.S. dollars. This risk,
generally known as "currency risk," means that a strong U.S. dollar will reduce
returns for U.S. investors while a weak U.S. dollar will increase those returns.

Foreign Market Risk. Since the underlying securities of the Depositary
Receipts in a Fund's portfolio trade on foreign exchanges at times when the U.S.
markets are not open for trading, the value of the Depositary Receipts
representing those underlying securities may change materially at times when the
U.S. markets are not open for trading, regardless of whether there is an active
U.S. market for Shares.

Liquidity Risk. Although the Depositary Receipts in the relevant benchmark
BNY ADR Indexes are listed on a national securities exchange or NASDAQ there can
be no assurance that a market for Depositary Receipts will be made or maintained
or that any such market will be or remain liquid. The price at which a Fund's
securities may be sold and the value of a Fund's Shares will be adversely
affected if trading markets for the securities are limited or absent or if
bid/ask spreads are wide.

Non-Diversification Risk. The Depositary Receipts of particular issuers,
or of issuers in particular industries, may represent a large portion of a BNY
ADR Index. If a Fund holds large positions in securities of a fewer number of
issuers, a Fund is more susceptible to any single economic, political, market or
regulatory event than an investment company that is more broadly diversified
across issuers.

Indexing Risk. Each Fund is a unit investment trust registered under the
Investment Company Act of 1940 ("1940 Act") and is not a managed fund.
Traditional methods of investment management for a managed fund typically
involve continuing evaluation and changes to a portfolio of securities on the
basis of economic, financial and market analyses. The only purchases and sales
that are made with respect to a Fund's portfolio will be those necessary to
create a portfolio that is designed to correspond generally, before fees and
expenses, to the relevant benchmark BNY ADR Index to the extent practicable.
Because no attempt is made to "manage" a Fund in the traditional sense, the
adverse financial condition of an issuer will not be the basis for the sale of
its securities from a
4

Fund's portfolio unless the issuer is removed from the relevant benchmark BNY
ADR Index.

Substitution Risk. While the Licensor often chooses a replacement company
for the BNY ADR Composite Index with some characteristics in common with a
company or companies removed from the index, a replacement company may have
little in common with the company it replaces.

Foreign Limitation Risk. A Participating Party's ability to acquire
Deposit Securities may be limited if the creation of new Deposit Securities
would cause any foreign ownership limits for the foreign securities underlying
the Deposit Securities to be exceeded. If this were to happen, it is possible
that a Participating Party's ability to create Shares may be adversely affected.

Correlation Risk. The Sponsor believes that over time the correlation
between each Fund's performance and that of its relevant benchmark BNY ADR
Index, before fees and expenses, will be 95% or better. A figure of 100% would
indicate perfect correlation. A Fund's return may not match the return of its
relevant benchmark BNY ADR Index as a result of Fund expenses and other factors.
For example, a rebalancing of a Fund's holdings may at times be necessary to
reflect changes in the composition of its relevant benchmark BNY ADR Index.
Rebalancing will result in transaction and other costs and could result in the
realization of capital gains or losses.

Investment Company Tax Diversification. Each Fund intends to maintain the
required level of diversification so as to qualify as a "regulated investment
company" for purposes of the Internal Revenue Code of 1986, as amended ("Code"),
in order to avoid liability for federal income tax to the extent that its
earnings are distributed to shareholders. Compliance with the diversification
requirements of the Code could limit the ability of a Fund to meet its
investment objective.

Fluctuation of Net Asset Value and Market Value. The NAV of the Shares
will fluctuate with changes in the market value of the securities held in each
Fund's portfolio. The market prices of Shares will fluctuate in accordance with
changes in NAV and supply and demand in the secondary market. The Sponsor cannot
predict whether Shares will trade below, at or above their NAV. Price
differences may be due, in large part, to the fact that supply and demand forces
at work in the secondary trading market for Shares will be closely related, but
not identical to, the same forces influencing the prices of the Depositary
Receipts of the relevant benchmark BNY ADR Index trading individually or in the
aggregate at any point in time. However, given that Shares can be created and
redeemed in Creation Units, the Sponsor believes that large discounts or
premiums to the NAV of Shares should not be sustained.

Trading Halts. Trading in Shares on NASDAQ may be halted due to market
conditions or for reasons that, in the view of NASDAQ, make trading in Shares
inadvisable. In addition, trading in Shares on NASDAQ is subject to

trading halts caused by extraordinary market volatility pursuant to NASDAQ
"circuit breaker" rules.

De-Listing from NASDAQ. There can be no assurance that the requirements of
NASDAQ necessary to maintain the listing of Shares of any Fund will continue to
be met or remain unchanged. NASDAQ may but is not required to remove the Shares
of a Fund from listing if: (1) following the initial twelve-month period
beginning upon the commencement of trading of a Fund, the Fund has more than 60
days remaining until termination and there are fewer than 50 Beneficial Owners
of the Shares for 30 or more consecutive trading days; (2) the value of the
relevant benchmark BNY ADR Index or portfolio of securities on which such Fund
is based is no longer calculated or available; or (3) such other event will
occur or condition exists that, in the opinion of NASDAQ, makes further dealings
on NASDAQ inadvisable. In addition, NASDAQ will remove the Shares from listing
and trading upon termination of a Fund.

RISK FACTORS SPECIFIC TO EACH FUND

Each Fund is subject to the additional risks associated with concentrating
its investments in companies in the market sector that its relevant benchmark
BNY ADR Index targets. Additional Fund specific risks include:

BLDRS ASIA 50 ADR INDEX FUND

Special Risks of Countries in the Asia Pacific Region. Certain of the
risks associated with international investments are heightened for investments
in these countries. For example, some of the currencies of these countries have
experienced devaluations relative to the U.S. dollar, and adjustments have been
made periodically in certain of such currencies. Certain countries, such as
Indonesia, face serious exchange constraints. Jurisdictional disputes also
exist, for example, between South Korea and North Korea. The Japanese economy
and financial markets have experienced considerable difficulty since 1990. The
Japanese stock market, as measured by the Tokyo Stock Price Index, has been
volatile. Declines in the Tokyo stock market have made the country's banks and
financial institutions vulnerable because of their large share portfolios.
Japanese banks have been left with large numbers of non-performing loans. The
Japanese economy labors under a heavy government budget deficit and historically
low interest rates. As a result of these factors, several high-profile
bankruptcies of Japanese banks, brokerage firms and insurance companies have
occurred. In addition, Hong Kong reverted to Chinese administration on July 1,
1997. The long-term effects of this reversion are not known at this time.

Emerging Markets Risk. The risks of foreign investments are usually much
greater for emerging markets. Investments in emerging markets may be considered
speculative. Emerging markets include those countries defined as "emerging" or
"developing" by the World Bank, the International Finance Corporation or the
United Nations. Emerging markets are riskier because they develop unevenly and
may never fully develop. They are more likely to experience hyperinflation and
6

currency devaluations, which adversely affect returns to U.S. investors. In
addition, the securities markets in many of these countries have far lower
trading volumes and less liquidity than developed markets. Because these markets
are so small, they may be more likely to suffer sharp and frequent price changes
or long term price depression due to adverse publicity, investor perceptions or
the transactions of a few large investors. Traditional measures of investment
value used in the United States, such as price to earnings ratios, may not apply
to certain small markets, making it more difficult to value their securities.

Political Instability. Many emerging markets are in countries with
histories of political instability and abrupt changes in policies. As a result,
their governments are more likely to take actions that are hostile or
detrimental to private enterprise or foreign investment than those of more
developed countries. Certain emerging markets may also face other significant
internal or external risks, including the risk of war, and ethnic, religious and
racial conflicts. In addition, governments in many emerging market countries
participate to a significant degree in their economies and securities markets,
which may impair investment and economic growth.

BLDRS DEVELOPED MARKETS 100 ADR INDEX FUND

Movement of Developed Markets. As increased globalization of Developed
Markets occurs, Developed Markets may tend to move in tandem with the U.S.
market. This would cause values of Depositary Receipts of issuers located in
Developed Markets to rise and fall in tandem with securities issued by U.S.
companies, and would reduce their asset allocation/diversification benefits for
U.S. investors.

Japanese Market Risk. Certain of the risks associated with international
investments are heightened for investments in Japan. The Japanese economy and
financial markets have experienced considerable difficulty since 1990. The
Japanese stock market, as measured by the Tokyo Stock Price Index, has been
volatile. Declines in the Tokyo stock market have made the country's banks and
financial institutions vulnerable because of their large share portfolios.
Japanese banks have been left with large numbers of non-performing loans. The
Japanese economy labors under a heavy government budget deficit and historically
low interest rates. As a result of these factors, several high-profile
bankruptcies of Japanese banks, brokerage firms and insurance companies have
occurred.

BLDRS EMERGING MARKETS 50 ADR INDEX FUND

Emerging Markets Risk. The risks of foreign investments are usually much
greater for emerging markets. Investments in emerging markets may be considered
speculative. Emerging markets include those countries defined as emerging or
developing by the World Bank, the International Finance Corporation or the
United Nations. Emerging markets are riskier because they develop unevenly and
may never fully develop. They are more likely to experience hyperinflation and
currency devaluations, which adversely affect returns to U.S. investors. In
addition,
7

the securities markets in many of these countries have far lower trading volumes
and less liquidity than developed markets. Because these markets are so small,
they may be more likely to suffer sharp and frequent price changes or long term
price depression due to adverse publicity, investor perceptions or the
transactions of a few large investors. Traditional measures of investment value
used in the United States, such as price to earnings ratios, may not apply to
certain small markets, making it more difficult to value their securities.

BLDRS EUROPE 100 ADR INDEX FUND

Movement of European Markets. As increased globalization of the world's
markets occurs, European Markets may tend to move in tandem with the U.S.
market. This would cause values of Depositary Receipts of issuers located in
Europe to rise and fall in tandem with securities issued by U.S. companies, and
would reduce their asset allocation/diversification benefits for U.S. investors.

REPORT OF INDEPENDENT AUDITORS

To the Sponsor, Trustee and the Beneficial Owners of the BLDRS Index Funds
Trust:

We have audited the accompanying statements of financial condition,
including the schedules of investments, of BLDRS Index Funds Trust (the
"Trust"), comprising the BLDRS Asia 50 ADR Index Fund, the BLDRS Developed
Markets 100 ADR Index Fund, the BLDRS Emerging Markets 50 ADR Index Fund, and
the BLDRS Europe 100 ADR Index Fund (each a "Fund" and collectively the "Funds")
as of November 8, 2002. These financial statements are the responsibility of the
Trust's Sponsor, Nasdaq Financial Products Services, Inc. (the "Sponsor"). Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation with the Bank of New York, Trustee, and
examination of contracts entered into by Authorized Participants for the
purchase of securities, as shown in the financial statements as of November 8,
2002. An audit also includes assessing the accounting principles used and
significant estimates made by the Sponsor, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Funds of the BLDRS Index
Funds Trust at November 8, 2002, in conformity with accounting principles
generally accepted in the United States.

ERNST & YOUNG LLP

New York, New York
November 8, 2002

BLDRS ASIA 50 ADR INDEX FUND
OF
BLDRS INDEX FUNDS TRUST

STATEMENT OF FINANCIAL CONDITION

OPENING OF BUSINESS, NOVEMBER 8, 2002

<Table>

ASSETS
Investment in Securities, at value (cost $19,505,311)
(Note 1).............................................. $19,505,311
TOTAL ASSETS.......................................... 19,505,311
-----------
LIABILITIES AND INTEREST OF BENEFICIAL OWNERS
TOTAL LIABILITIES..................................... --
-----------
TOTAL NET ASSETS
(applicable to 400,000 Shares outstanding) (Note 3)........ $19,505,311
===========
NET ASSET VALUE PER SHARE
(comprised of $19,505,311/400,000 Shares outstanding) (Note
3)....................................................... $ 48.76
===========
</Table>

NOTES TO STATEMENT OF FINANCIAL CONDITION:

1. On the Initial Date of Deposit, Portfolio Deposits were received by The
Bank of New York, the Fund's Trustee, in the form of executed securities
transactions effected for all 50 Index Securities, which transactions will
settle within three Business Days of the Initial Date of Deposit, from
Authorized Participants, in exchange for 8 Creation Units of the Fund equivalent
to 400,000 Shares. Irrevocable letters of credit issued by the Authorized
Participants and collateral provided by the Authorized Participants and
collateral in the form of securities have been provided by the Authorized
Participants, have been delivered to the Trustee, to be drawn on if necessary,
for the benefit of the Fund to fund the settlements of the executed securities
transactions. The value of securities has been based on the November 7, 2002
closing sales price on the exchange or market which is deemed the principal
market therefor.

2. It is anticipated that the Fund will pay the expenses of its operation,
including the fees of its Trustee and payments to The Bank of New York for a
license to use The Bank of New York's BNY Asia 50 ADR Index as a basis for
determining the composition of the Fund, as described under "Expenses of a
Fund", "Fees and Expenses" and "License Agreement" in this Prospectus. Initial
fees and expenses incurred in connection with the organization of the Funds and
the offering of shares of the Funds, estimated at $550,000, will be borne by the
Trustee.

The Sponsor has undertaken that on each day during the fiscal year ending
September 30, 2003 the ordinary operating expenses of the Fund as calculated by
the Trustee will not be permitted to exceed an amount which is 30/100 of 1% per
annum of the daily NAV of the Fund. To the extent during such period the
ordinary operating expenses of the Fund do exceed such 30/100 of 1% amount, the
Licensor will first waive licensing fees applicable to the Fund and, if such
waiver is insufficient, the Sponsor will thereafter reimburse the Fund for or
assume such excess ordinary operating expenses. The Licensor and the Sponsor
retain the ability to be repaid by the Fund for, respectively, licensing fees so
waived or expenses so reimbursed or assumed to the extent that subsequently
during the year expenses fall below the 30/100 of 1% per annum level on any
given day. See "Expenses of a Fund" and "Fees and Expenses" in this Prospectus.

3. Shares are created and redeemed by the Fund only in Creation Unit size
aggregations of 50,000 Shares. Transaction Fees at varying amounts may be
charged by the Trustee to those persons creating or redeeming Creation Units.
See "Creation and Redemption of Shares" and "Fees and Expenses" in this
Prospectus for further description.

BLDRS ASIA 50 ADR INDEX FUND
OF THE
BLDRS INDEX FUNDS TRUST

SCHEDULE OF INVESTMENTS

SECURITIES REQUIRED FOR A PORTFOLIO DEPOSIT
ON THE OPENING OF BUSINESS

NOVEMBER 8, 2002

<Table>
<Caption>
DEPOSITARY RECEIPTS SHARES VALUE
- ------------------- ------- -----------

Amcor Ltd. ADS.................................... 6,424 $ 120,707
Australia & New Zealand Banking Group Ltd. ADS.... 9,384 496,320
Advantest Corp. ADS............................... 9,856 101,517
BHP Billiton Ltd. ADS............................. 57,960 632,344
Canon Inc. ADS.................................... 24,952 931,458
CNOOC Ltd. ADS.................................... 3,456 86,607
China Unicom Ltd. ADS............................. 8,824 60,003
Coles Myer Ltd. ADS............................... 4,624 132,709
CSK Corp. ADS..................................... 2,192 49,101
Fuji Photo Film Co. Ltd. ADS...................... 15,096 442,917
Hitachi Ltd. ADS.................................. 10,416 419,765
Honda Motor Co. Ltd. ADS.......................... 56,200 1,000,360
Infosys Technologies Ltd. ADS..................... 3,016 234,313
Ito-Yokado Co. Ltd. ADS........................... 11,336 328,744
James Hardie Industries N.V. ADS.................. 2,816 50,125
Kookmin Bank ADS.................................. 8,960 306,880
Korea Electric Power Corp. ADS.................... 9,992 83,733
Kirin Brewery Co. Ltd. ADS........................ 29,232 180,069
KT Corp. ADS...................................... 9,552 196,007
Kubota Corp. ADS.................................. 7,704 100,922
Kyocera Corp. ADS................................. 5,584 351,457
Mitsubishi Tokyo Financial Group Inc. ADS......... 178,216 1,158,404
Matsushita Electric Industrial Co. ADS............ 78,304 814,362
Mitsui & Co. Ltd. ADS............................. 2,472 231,132
National Australia Bank Ltd. ADS.................. 9,608 870,485
NEC Corp. ADS..................................... 49,056 188,424
Nidec Corp. ADS (Nihon Densan Kabushikikaisha).... 1,376 84,693
Nomura Holdings Inc. ADS.......................... 61,264 701,473
Nissan Motor Co. Ltd. ADS......................... 39,264 596,813
Nippon Telegraph & Telephone Corp. ADS............ 20,144 400,866
News Corp. Ltd. ADS............................... 11,600 299,512
</Table>

BLDRS ASIA 50 ADR INDEX FUND

OF THE

BLDRS INDEX FUNDS TRUST -- CONT'D

<Table>
<Caption>
DEPOSITARY RECEIPTS SHARES VALUE
- ------------------- ------- -----------

News Corp. Ltd. ADS Vtg Ord Pfd................... 23,232 $ 508,781
Telecom Corp. of New Zealand ADS.................. 5,488 104,162
Pioneer Corp. ADS................................. 5,608 100,944
POSCO ADS......................................... 2,920 69,934
Sanyo Electric Co. Ltd. ADS....................... 11,688 164,789
SK Telecom Co. ADS................................ 12,936 270,492
Sony Corp. ADS.................................... 26,704 1,149,607
Santos Ltd. ADS................................... 4,512 62,627
TDK Corp. ADS..................................... 4,160 174,720
Telekomunikasi Indonesia ADS...................... 7,192 46,748
Telstra Corp. Ltd. ADS............................ 28,112 379,512
Toyota Motor Corp. ADS............................ 50,528 2,613,308
Trend Micro Inc. ADS.............................. 2,960 68,998
Taiwan Semiconductor Manufacturing Co. ADS........ 93,264 825,386
United Microelectronics Corp. ADS................. 72,448 336,159
Westpac Banking Corp. ADS......................... 10,936 441,158
WMC Ltd. ADS...................................... 8,680 151,812
China Mobile (Hong Kong) Ltd. ADS................. 25,752 322,930
PetroChina Co. Ltd. ADS........................... 3,272 61,022
-----------
Total Investments................................. $19,505,311
===========
</Table>

See accompanying notes to statement of financial condition.

BLDRS DEVELOPED MARKETS 100 ADR INDEX FUND
OF
BLDRS INDEX FUNDS TRUST

STATEMENT OF FINANCIAL CONDITION

OPENING OF BUSINESS, NOVEMBER 8, 2002

<Table>

ASSETS
Investment in Securities, at value (cost $18,019,694)
(Note 1).............................................. $18,019,694
TOTAL ASSETS.......................................... 18,019,694
-----------
LIABILITIES AND INTEREST OF BENEFICIAL OWNERS
TOTAL LIABILITIES..................................... --
-----------
TOTAL NET ASSETS
(applicable to 400,000 Shares outstanding) (Note 3)........ $18,019,694
===========
NET ASSET VALUE PER SHARE
(comprised of $18,019,694/400,000 Shares outstanding) (Note
3)....................................................... $ 45.05
===========
</Table>

NOTES TO STATEMENT:

1. On the Initial Date of Deposit, Portfolio Deposits were received by The
Bank of New York, the Fund's Trustee, in the form of executed securities
transactions effected for all 100 Index Securities, which transactions will
settle within three Business Days of the Initial Date of Deposit, from
Authorized Participants, in exchange for 8 Creation Units of the Fund equivalent
to 400,000 Shares. Irrevocable letters of credit issued by the Authorized
Participants and collateral provided by the Authorized Participants and
collateral in the form of securities have been provided by the Authorized
Participants, have been delivered to the Trustee, to be drawn on if necessary,
for the benefit of the Fund to fund the settlements of the executed securities
transactions. The value of securities has been based on the November 7, 2002
closing sales price on the exchange or market which is deemed the principal
market therefor.

2. It is anticipated that the Fund will pay the expenses of its operation,
including the fees of its Trustee and payments to The Bank of New York for a
license to use The Bank of New York's BNY Developed Markets 100 ADR Index as a
basis for determining the composition of the Fund, as described under "Expenses
of a Fund", "Fees and Expenses" and "License Agreement" in this Prospectus.
Initial fees and expenses incurred in connection with the organization of the
Funds and the offering of shares of the Funds, estimated at $550,000, will be
borne by the Trustee.

BLDRS DEVELOPED MARKETS 100 ADR INDEX FUND
OF THE
BLDRS INDEX FUNDS TRUST

SCHEDULE OF INVESTMENTS

SECURITIES REQUIRED FOR A PORTFOLIO DEPOSIT
ON THE OPENING OF BUSINESS

NOVEMBER 8, 2002

<Table>
<Caption>
DEPOSITARY RECEIPTS SHARES VALUE
------------------- ------ -----------

Anglo American PLC ADS............................. 9,192 $ 126,675
ABN Amro Holding N.V. ADS.......................... 9,432 143,649
Allied Domecq PLC ADS.............................. 1,888 48,144
Aegon N.V. Ord Shares 8,592 112,727
Koninklijke Ahold N.V. ADS......................... 6,328 79,606
Allied Irish Banks PLC ADS......................... 3,048 85,435
Akzo Nobel N.V. ADS................................ 1,736 51,368
Australia & New Zealand Banking Group Ltd. ADS..... 2,048 108,319
Aventis S.A. ADS................................... 4,680 279,864
AXA S.A. ADS....................................... 9,392 129,046
Allianz AG ADS..................................... 12,928 147,121
AstraZeneca PLC ADS................................ 11,160 413,590
Six Continents PLC ADS............................. 5,896 50,588
Bayer AG ADS....................................... 4,680 92,617
Banco Bilbao Vizcaya Argentaria S.A. ADS........... 21,752 207,297
Barclays PLC ADS................................... 11,248 322,818
BHP Billiton Ltd. ADS.............................. 12,656 138,077
BOC Group PLC ADS.................................. 1,696 46,301
BP PLC ADS......................................... 25,512 954,149
BG Group PLC ADS................................... 4,808 95,150
British Sky Broadcasting Group PLC ADS............. 1,368 79,481
British American Tobacco PLC ADS................... 5,368 108,917
BT Group PLC ADS................................... 5,904 186,803
Canon Inc. ADS..................................... 5,448 203,374
CRH PLC ADS........................................ 3,560 45,924
Cadbury Schweppes PLC ADS.......................... 3,504 92,295
Credit Suisse Group ADS............................ 8,104 156,245
Groupe Danone ADS.................................. 4,576 119,434
Diageo PLC ADS..................................... 5,648 253,143
Deutsche Telekom AG ADS............................ 16,368 183,322
ENI S.p.A. ADS..................................... 3,800 257,640
Endesa S.A. ADS.................................... 6,856 74,456
Enel S.p.A. ADS.................................... 2,624 65,075
Reed Elsevier N.V. ADS............................. 2,384 62,652
Fuji Photo Film Co. Ltd. ADS....................... 3,296 96,705
Gallaher Group PLC ADS............................. 1,104 44,447
</Table>

BLDRS DEVELOPED MARKETS 100 ADR INDEX FUND

OF THE

BLDRS INDEX FUNDS TRUST -- CONT'D

<Table>
<Caption>
DEPOSITARY RECEIPTS SHARES VALUE
------------------- ------ -----------

GlaxoSmithKline PLC ADS............................ 20,632 $ 818,265
HSBC Holdings PLC ADS.............................. 12,880 736,865
Hitachi Ltd. ADS................................... 2,272 91,562
Honda Motor Co. Ltd. ADS........................... 12,272 218,442
Sanpaolo IMI S.p.A. ADS............................ 4,248 53,950
ING Groep N.V. ADS................................. 11,232 183,082
Governor & Co. of the Bank of Ireland ADS.......... 1,720 76,832
Imperial Tobacco Group PLC......................... 2,488 78,248
Ito-Yokado Co. Ltd. ADS............................ 2,472 71,688
Royal KPN N.V. ADS................................. 11,640 68,094
Kyocera Corp. ADS.................................. 1,216 76,535
Lafarge ADS........................................ 3,616 72,248
Lloyds TSB Group PLC ADS........................... 9,512 346,237
Mitsubishi Tokyo Financial Group Inc. ADS.......... 38,912 252,928
Matsushita Electric Industrial Co. ADS............. 17,096 177,798
Mitsui & Co. Ltd. ADS.............................. 536 50,116
National Australia Bank Ltd. ADS................... 2,096 189,898
National Grid Transco PLC ADS...................... 4,224 148,685
Norsk Hydro ASA ADS................................ 1,024 40,724
NEC Corp. ADS...................................... 10,712 41,145
Nomura Holdings Inc. ADS........................... 13,376 153,155
Nokia Corp. ADS.................................... 32,384 557,005
Nissan Motor Co. Ltd. ADS.......................... 8,568 130,234
Nippon Telegraph & Telephone Corp. ADS............. 4,400 87,560
Novo Nordisk A/S ADS............................... 1,496 44,386
Novartis AG ADS.................................... 18,008 689,526
News Corp. Ltd. ADS................................ 2,536 65,480
News Corp. Ltd. ADS Vtg Ord Pfd.................... 5,072 111,077
Amersham PLC ADS................................... 960 43,190
mmO2 PLC ADS....................................... 5,912 48,597
Koninklijke Philips Electronics N.V. ADS........... 8,688 152,474
Pearson PLC ADS.................................... 5,456 60,016
Portugal Telecom SGPS S/A ADS...................... 7,728 46,754
Prudential PLC ADS................................. 6,800 99,280
Royal Dutch Petroleum Co. ADS...................... 14,264 612,211
Repsol YPF S.A. ADS................................ 6,560 72,947
Rio Tinto PLC ADS.................................. 1,816 143,827
Reed Elsevier PLC ADS.............................. 2,152 80,700
Sanyo Electric Co. Ltd. ADS........................ 2,552 35,981
SAP AG ADS......................................... 5,616 110,074
</Table>

BLDRS DEVELOPED MARKETS 100 ADR INDEX FUND

OF THE

BLDRS INDEX FUNDS TRUST -- CONT'D

<Table>
<Caption>
DEPOSITARY RECEIPTS SHARES VALUE
------------------- ------ -----------

xShell Transport & Trading Co. PLC ADS............. 11,008 $ 418,414
Stora Enso Oyj ADS................................. 4,224 45,492
Schering AG ADS.................................... 1,216 58,623
Siemens AG ADS..................................... 5,672 261,479
Sony Corp. ADS..................................... 5,832 251,068
Sanofi-Synthelabo ADS.............................. 5,288 155,520
Scottish Power PLC ADS............................. 3,160 71,100
Banco Santander Central Hispano S.A. ADS........... 32,488 196,228
STMicroelectronics N.V. ADS........................ 3,944 80,694
SUEZ ADS........................................... 6,520 117,816
Telefonica S.A. ADS................................ 10,432 296,686
Telecom Italia S.p.A. ADS.......................... 1,616 132,835
Telstra Corp. Ltd. ADS............................. 6,136 82,836
Toyota Motor Corp. ADS............................. 11,032 570,575
TotalFinaElf ADS................................... 9,656 654,677
Unilever PLC ADS................................... 4,960 194,035
Unilever N.V. ADS.................................. 3,896 248,954
UPM Kymmene Corp. ADS.............................. 1,768 59,140
Vivendi Universal ADS.............................. 6,648 89,083
EON AG ADS......................................... 4,352 203,108
Vodafone Group PLC ADS............................. 46,432 744,769
Westpac Banking Corp. ADS.......................... 2,392 96,492
WPP Group PLC ADS.................................. 1,568 56,385
BASF AG ADS........................................ 3,600 133,415
-----------
Total Investments.................................. $18,019,694
===========
</Table>

See accompanying notes to statement of financial condition.

BLDRS EMERGING MARKETS 50 ADR INDEX FUND
OF
BLDRS INDEX FUNDS TRUST

STATEMENT OF FINANCIAL CONDITION

OPENING OF BUSINESS, NOVEMBER 8, 2002

<Table>

ASSETS
Investment in Securities, at value (cost $20,221,876)
(Note 1).............................................. $20,221,876
TOTAL ASSETS.......................................... 20,221,876
-----------
LIABILITIES AND INTEREST OF BENEFICIAL OWNERS
TOTAL LIABILITIES..................................... --
-----------
TOTAL NET ASSETS
(applicable to 400,000 Shares outstanding) (Note 3)........ $20,221,876
===========
NET ASSET VALUE PER SHARE
(comprised of $20,221,876/400,000 Shares outstanding) (Note
3)....................................................... $ 50.55
===========
</Table>

NOTES TO STATEMENT:

2. It is anticipated that the Fund will pay the expenses of its operation,
including the fees of its Trustee and payments to The Bank of New York for a
license to use The Bank of New York's BNY Emerging Markets 50 ADR Index as a
basis for determining the composition of the Fund, as described under "Expenses
of a Fund", "Fees and Expenses" and "License Agreement" in this Prospectus.
Initial fees and expenses incurred in connection with the organization of the
Funds and the offering of shares of the Funds, estimated at $550,000, will be
borne by the Trustee.

BLDRS EMERGING MARKETS 50 ADR INDEX FUND
OF THE
BLDRS INDEX FUNDS TRUST

SCHEDULE OF INVESTMENTS

SECURITIES REQUIRED FOR A PORTFOLIO DEPOSIT
ON THE OPENING OF BUSINESS

NOVEMBER 8, 2002

<Table>
<Caption>
DEPOSITARY RECEIPTS SHARES VALUE
- ------------------- ------- -----------

America Movil S.A. de C.V. ADS.................... 40,792 $ 554,363
AngloGold Ltd. ADS................................ 10,800 309,312
AU Optronics Corp. ADS............................ 24,792 176,271
Banco Bradesco S.A. ADS........................... 11,080 140,494
Companhia de Bebidas das Americas ADS............. 23,632 342,664
Compania de Minas Buenaventura S.A. ADS........... 6,288 146,448
CNOOC Ltd. ADS.................................... 11,464 287,288
China Unicom Ltd. ADS............................. 29,280 199,104
Compania de Telecomunicaciones de Chile S.A....... 12,752 118,339
Cemex S.A. de C.V. ADS............................ 31,832 707,307
Embraer Empresa Braziliera de Aeronautica S/A..... 8,328 134,331
Fomento Economico Mexicano S.A. de C.V. ADS....... 4,656 170,875
Gold Fields Ltd. ADS.............................. 34,536 409,597
HDFC Bank Ltd. ADS................................ 9,712 130,529
Harmony Gold Mining Co. Ltd. ADS.................. 17,520 261,924
Huaneng Power International Inc................... 3,880 115,857
ICICI Bank Ltd. ADS............................... 20,944 113,098
Infosys Technologies Ltd. ADS..................... 10,000 776,900
Banco Itau S.A. ADS............................... 10,632 218,700
Kookmin Bank ADS.................................. 29,720 1,017,910
Korea Electric Power Corp. ADS.................... 33,136 277,680
KT Corp. ADS...................................... 31,672 649,909
Mobile Telesystems ADS............................ 10,320 363,264
Magyar Tavkozlesi Vallalat Rt. ADS................ 8,696 136,440
Macronix International Co. ADS.................... 28,664 102,904
Petroleo Brasileiro S/A ADS....................... 29,080 372,515
Petroleo Brasileiro S/A ADS A..................... 39,160 457,389
POSCO ADS......................................... 9,688 232,028
Dr. Reddy's Laboratories Ltd. ADS................. 6,000 85,140
Companhia Vale do Rio Doce ADS Cl A Pfd........... 14,344 363,620
Companhia Vale do Rio Doce ADS.................... 12,344 328,104
</Table>

BLDRS EMERGING MARKETS 50 ADR INDEX FUND

OF THE

BLDRS INDEX FUNDS TRUST -- CONT'D

<Table>
<Caption>
DEPOSITARY RECEIPTS SHARES VALUE
- ------------------- ------- -----------

Sasol Ltd. ADS.................................... 58,544 $ 651,595
Satyam Computer Services Ltd. ADS................. 16,280 184,290
SK Telecom Co. ADS................................ 42,912 897,290
China Petroleum & Chemical Corp. ADS.............. 10,160 157,175
Sappi Ltd. ADS.................................... 21,816 258,520
Brasil Telecom Participacoes S/A.................. 4,552 118,124
Teva Pharmaceutical Industries Ltd. ADS........... 13,240 975,523
Telekomunikasi Indonesia ADS...................... 23,848 155,012
Telefonos de Mexico S.A. de C.V. ADS.............. 38,344 1,185,596
Tele Norte Leste Participacoes S.A. ADS........... 26,104 174,114
Tatneft ADS....................................... 7,552 113,129
Taiwan Semiconductor Manufacturing Co. ADS........ 309,376 2,737,978
Grupo Televisa S.A. de C.V. ADS................... 8,328 238,680
Unibanco-Uniao de Bancos Brasileiros S/A GDS...... 7,496 66,115
United Microelectronics Corp. ADS................. 240,304 1,115,011
Vimpel Communications ADS......................... 3,624 105,531
Wipro Ltd. ADS.................................... 3,848 114,709
China Mobile (Hong Kong) Ltd. ADS................. 85,408 1,071,015
PetroChina Co. Ltd. ADS........................... 10,840 202,165
-----------
Total Investments................................. $20,221,876
===========
</Table>

See accompanying notes to statement of financial condition.

BLDRS EUROPE 100 ADR INDEX FUND
OF
BLDRS INDEX FUNDS TRUST

STATEMENT OF FINANCIAL CONDITION

OPENING OF BUSINESS, NOVEMBER 8, 2002

<Table>

ASSETS
Investment in Securities, at value (cost $17,979,438)
(Note 1).............................................. $17,979,438
TOTAL ASSETS.......................................... 17,979,438
-----------
LIABILITIES AND INTEREST OF BENEFICIAL OWNERS
TOTAL LIABILITIES..................................... --
-----------
TOTAL NET ASSETS
(applicable to 400,000 Shares outstanding) (Note 3)........ $17,979,438
===========
NET ASSET VALUE PER SHARE
(comprised of $17,979,438/400,000 Shares outstanding) (Note
3)....................................................... $ 44.95
===========
</Table>

NOTES TO STATEMENT:

1. On the Initial Date of Deposit, Portfolio Deposits were received by The
Bank of New York, the Fund's Trustee, in the form of executed securities
transactions effected for all 100 Index Securities, which transactions will
settle within three Business Days of the Initial Date of Deposit, from
Authorized Participants, in exchange for 8 Creation Units of the Fund equivalent
to 400,000 Shares. Irrevocable letters of credit issued by the Authorized
Participants and collateral in the form of securities have been provided by the
Authorized Participants, and collateral provided by the Authorized Participants
have been delivered to the Trustee, to be drawn on if necessary, for the
benefit of the Fund to fund the settlements of the executed securities
transactions. The value of securities has been based on the November 7, 2002
closing sales price on the exchange or market which is deemed the principal
market therefor.

2. It is anticipated that the Fund will pay the expenses of its operation,
including the fees of its Trustee and payments to The Bank of New York for a
license to use The Bank of New York's BNY Europe 100 ADR Index as a basis for
determining the composition of the Fund, as described under "Expenses of a
Fund", "Fees and Expenses" and "License Agreement" in this Prospectus. Initial
fees and expenses incurred in connection with the organization of the Funds and
the offering of shares of the Funds, estimated at $550,000, will be borne by the
Trustee.

BLDRS EUROPE 100 ADR INDEX FUND
OF THE
BLDRS INDEX FUNDS TRUST

SCHEDULE OF INVESTMENTS

SECURITIES REQUIRED FOR A PORTFOLIO DEPOSIT
ON THE OPENING OF BUSINESS

NOVEMBER 8, 2002

<Table>
<Caption>
DEPOSITARY RECEIPTS SHARES VALUES
------------------- ------ -----------

Anglo American PLC ADS............................. 10,672 $ 147,071
ABB Ltd. ADS....................................... 8,568 17,393
ABN Amro Holding N.V. ADS.......................... 10,944 166,677
Adecco S.A. ADS.................................... 3,912 36,421
Allied Domecq PLC ADS.............................. 2,192 55,896
Aegon N.V. Ord Shares.............................. 9,976 130,885
Koninklijke Ahold N.V. ADS......................... 7,344 92,388
Allied Irish Banks PLC ADS......................... 3,544 99,338
Akzo Nobel N.V. ADS................................ 2,016 59,653
Alcatel S.A. ADS................................... 9,128 45,275
Aventis S.A. ADS................................... 5,440 325,312
Amvescap PLC ADS................................... 3,128 41,665
AXA S.A. ADS....................................... 10,896 149,711
Allianz AG ADS..................................... 15,000 170,700
AstraZeneca PLC ADS................................ 12,960 480,298
Six Continents PLC ADS............................. 6,848 58,756
Bayer AG ADS....................................... 5,432 107,499
Banco Bilbao Vizcaya Argentaria S.A. ADS........... 25,256 240,690
Barclays PLC ADS................................... 13,056 374,707
BOC Group PLC ADS.................................. 1,968 53,726
BP PLC ADS......................................... 29,616 1,107,638
Banco Comercial Portugues S.A. ADS................. 3,096 34,675
BG Group PLC ADS................................... 5,584 110,507
British Sky Broadcasting Group PLC ADS............. 1,592 92,495
British American Tobacco PLC ADS................... 6,232 126,447
BT Group PLC ADS................................... 6,856 216,924
CRH PLC ADS........................................ 4,136 53,354
Ciba Specialty Chemicals Holdings Inc. ADS......... 1,048 37,833
Cadbury Schweppes PLC ADS.......................... 4,064 107,046
Credit Suisse Group ADS............................ 9,400 181,232
Cable & Wireless PLC ADS........................... 5,944 39,765
Groupe Danone ADS.................................. 5,312 138,643
Diageo PLC ADS..................................... 6,560 294,019
</Table>

BLDRS EUROPE 100 ADR INDEX FUND

OF THE

BLDRS INDEX FUNDS TRUST -- CONT'D

<Table>
<Caption>
DEPOSITARY RECEIPTS SHARES VALUES
------------------- ------ -----------

Deutsche Telekom AG ADS............................ 19,000 $ 212,800
ENI S.p.A. ADS..................................... 4,408 298,862
Endesa S.A. ADS.................................... 7,952 86,359
Electrolux AB ADS.................................. 1,296 38,439
Enel S.p.A. ADS.................................... 3,048 75,590
Reed Elsevier N.V. ADS............................. 2,768 72,743
France Telecom ADS................................. 3,320 41,035
Gallaher Group PLC ADS............................. 1,280 51,533
GlaxoSmithKline PLC ADS............................ 23,952 949,936
Gucci Group N.V.................................... 392 35,888
Hanson PLC ADS..................................... 1,160 26,993
HSBC Holdings PLC ADS.............................. 14,944 854,946
Imperial Chemical Industries PLC ADS............... 2,352 37,820
Sanpaolo IMI S.p.A. ADS............................ 4,936 62,687
ING Groep N.V. ADS................................. 13,040 212,552
Governor & Co. of the Bank of Ireland ADS.......... 1,992 88,983
Imperial Tobacco Group PLC......................... 2,880 90,576
Royal KPN N.V. ADS................................. 13,512 79,045
Lafarge ADS........................................ 4,200 83,916
Lloyds TSB Group PLC ADS........................... 11,040 401,856
National Grid Transco PLC ADS...................... 4,904 172,621
Norsk Hydro ASA ADS................................ 1,184 47,088
Nokia Corp. ADS.................................... 37,592 646,582
Novo Nordisk A/S ADS............................... 1,736 51,507
Novartis AG ADS.................................... 20,904 800,414
Amersham PLC ADS................................... 1,112 50,029
mmO2 PLC ADS....................................... 6,856 56,356
Koninklijke Philips Electronics N.V. ADS........... 10,080 176,904
P&O Princess Cruises PLC ADS....................... 1,368 44,310
Pearson PLC ADS.................................... 6,336 69,696
Portugal Telecom SGPS S/A ADS...................... 8,968 54,256
Prudential PLC ADS................................. 7,896 115,282
Royal Dutch Petroleum Co. ADS...................... 16,560 710,755
Repsol YPF S.A. ADS................................ 7,616 84,690
Rio Tinto PLC ADS.................................. 2,104 166,637
Reuters Group PLC ADS.............................. 1,888 36,250
Reed Elsevier PLC ADS.............................. 2,504 93,900
</Table>

BLDRS EUROPE 100 ADR INDEX FUND

OF THE

BLDRS INDEX FUNDS TRUST -- CONT'D

<Table>
<Caption>
DEPOSITARY RECEIPTS SHARES VALUES
------------------- ------ -----------

Ryanair Holdings PLC ADS........................... 1,112 $ 47,872
SAP AG ADS......................................... 6,512 127,635
Shell Transport & Trading Co. PLC ADS.............. 12,776 485,616
Swisscom AG ADS.................................... 1,656 49,597
Stora Enso Oyj ADS................................. 4,904 52,816
Shire Pharmaceuticals Group PLC ADS................ 1,272 31,533
Schering AG ADS.................................... 1,408 67,880
Siemens AG ADS..................................... 6,584 303,522
Smith & Nephew PLC ADS............................. 664 38,147
Sanofi-Synthelabo ADS.............................. 6,136 180,460
Scottish Power PLC ADS............................. 3,664 82,440
Banco Santander Central Hispano S.A. ADS........... 37,712 227,780
STMicroelectronics N.V. ADS........................ 4,584 93,789
Syngenta AG ADS.................................... 4,008 48,657
SUEZ ADS........................................... 7,568 136,754
Telefonica S.A. ADS................................ 12,112 344,465
Telecom Italia S.p.A. ADS.......................... 1,872 153,878
TotalFinaElf ADS................................... 11,208 759,902
TPG N.V. ADS....................................... 2,480 42,805
Unilever PLC ADS................................... 5,760 225,331
Unilever N.V. ADS.................................. 4,520 288,828
UPM Kymmene Corp. ADS.............................. 2,056 68,773
United Utilities PLC ADS........................... 2,200 43,120
Vivendi Universal ADS.............................. 7,720 103,448
Vivendi Environnement ADS.......................... 1,672 38,222
EON AG ADS......................................... 5,056 235,964
Vodafone Group PLC ADS............................. 53,896 864,492
Wolseley PLC ADS (Each rep. 5 Ord. Shares)......... 912 40,585
WPP Group PLC ADS.................................. 1,824 65,592
BASF AG ADS........................................ 4,184 155,060
-----------
TOTAL INVESTMENTS.................................. $17,979,438
===========
</Table>

See accompanying notes to statement of financial condition.

FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy
and hold Shares of a Fund. The fees and expenses of each Fund are accrued daily
and reflected in the NAV of each Fund. Each Fund accrues ordinary operating
expenses at an annual rate of 0.30%. (See "Expenses of a Fund")

<Table>
<Caption>
BLDRS
DEVELOPED BLDRS
BLDRS MARKETS EMERGING BLDRS
ASIA 50 100 ADR MARKETS EUROPE 100
ADR INDEX 50 ADR ADR
INDEX FUND FUND INDEX FUND INDEX FUND
---------- --------- ---------- ----------

I. SHAREHOLDER TRANSACTION EXPENSES(a)
A. CREATION TRANSACTION FEE
Through NSCC(b)...................... $ 500 $1,000 $ 500 $1,000
Outside NSCC(b)...................... Up to1,500 Up to3,000 Up to1,500 Up to3,000
$ $ $ $
B. REDEMPTION TRANSACTION FEE
Through NSCC(c)...................... $ 500 $1,000 $ 500 $1,000
Outside NSCC(c)...................... Up to1,500 Up to3,000 Up to1,500 Up to3,000
$ $ $ $
II. ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from
Fund assets) BASED ON ESTIMATED FUND
EXPENSES FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 2003 (AS A PERCENTAGE
OF AVERAGE NET ASSETS)
Trustee Fees(d)........................ 0.10% 0.10% 0.10% 0.10%
License Fees(e)........................ 0.06% 0.06% 0.06% 0.06%
Marketing Expenses..................... 0.10% 0.10% 0.10% 0.10%
Other Operating Expenses............... 0.04% 0.04% 0.04% 0.04%
----- ----- ----- -----
Total Expenses......................... 0.30% 0.30% 0.30% 0.30%
</Table>

- ---------------

(a) Only investors purchasing or redeeming Shares in Creation Units will pay the
transaction expenses described in Part I of the Fees and Expenses Table.
Shareholders purchasing Shares in the secondary market will incur customary
brokerage commissions and charges and may pay some or all of the spread
between the bid and the offered price in the secondary market on each leg of
a round trip (purchase and sale) transaction.

(b) The creation transaction fee is the same regardless of the number of
Creation Units being purchased pursuant to any one creation order. One
Creation Unit consists of 50,000 Shares.

(c) The redemption transaction fee is the same regardless of the number of
Creation Units being redeemed pursuant to any one redemption order. One
Creation Unit consists of 50,000 Shares.

(d) The Trustee's annual fee for each Fund ranges from 0.06% to 0.10%, based on
the net asset value of the relevant Fund.

(e) To the extent during such period the ordinary operating expenses of a Fund
do exceed 0.30%, the Licensor will waive licensing fees applicable to the
relevant Fund.

EXAMPLE

This Example is intended to help you compare the cost of investing in
Shares with the cost of investing in other investment vehicles.

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

<Table>
<Caption>
1 YEAR 3 YEARS
------ -------

$31 $97
</Table>

See "Expenses of a Fund" in this Prospectus for additional information
regarding expenses.

INDEX PERFORMANCE HISTORY

Because the Funds are new, they do not have a performance history. Each
Fund's performance will, over time, be compared to its relevant benchmark BNY
ADR Index and a relevant third party benchmark index. The charts and tables
shown on pages 27 - 28 compare the average quarterly performance of: (1) The BNY
Asia 50 ADR Index versus the performance of The MSCI AC Asia Pacific Free Index;
(2) The BNY Developed Markets 100 ADR Index versus the performance of The MSCI
EAFE Index; (3) The BNY Emerging Markets 50 ADR Index versus the performance of
The MSCI Emerging Markets Free Index; and (4) The BNY Europe 100 ADR Index
versus the performance of The MSCI AC Europe Index for the periods beginning on
April 12, 2001, the commencement date for the BNY ADR Indexes and ending on
September 30, 2002. How a Fund's relevant BNY ADR Index performed is not
necessarily an indication of the Fund's future performance.

The tables on pages 27 - 28 illustrate two comparisons of the BNY ADR
Indexes with the corresponding indexes stated above. A comparison of actual
index values for the above indexes appears under the columns labeled "Actual
Index Values." A comparison of the "Percentage Change in Index Values" is also
given, assuming a starting value of 100 on April 12, 2001. The tables
illustrating percentage change can be used to more simply track the movement of
the BNY ADR Indexes versus the comparison indexes. The graphic charts below the
tables show the Percentage Changes in Index Values to assist in comparison.

BNY ASIA 50 ADR INDEX

<Table>
<Caption>
ACTUAL INDEX VALUES
----------------------------------------------------------------------
4/12/01 6/30/01 9/30/01 12/31/01 3/31/02 6/30/02 9/30/02
- ---------------------------------------------------------------------------------------------------------------------

BNY Asia 50 ADR Index 1,011.07 1,015.58 752.45 842.55 892.19 858.20 729.24
MSCI AC Asia Pacific Free Index 83.38 82.74 67.14 69.99 72.87 74.27 64.54
</Table>

<Table>
<Caption>
PERCENT CHANGE IN INDEX VALUES
--------------------------------------------------------------------
4/12/01 6/30/01 9/30/01 12/31/01 3/31/02 6/30/02 9/30/02
- -------------------------------------------------------------------------------------------------------------------

BNY Asia 50 ADR Index 100 100.45 74.42 83.33 88.24 84.88 72.13
MSCI AC Asia Pacific Free Index 100 99.24 80.53 89.94 87.40 89.08 77.41
</Table>

[BNY ASIA 50 ADR INDEX Graph]

BNY DEVELOPED MARKETS 100 ADR INDEX

BNY Developed Markets 100 ADR Index 1,013.00 946.60 798.40 865.74 859.10 805.02 645.77
MSCI EAFE Index 1,326.52 1,261.50 1,080.95 1,154.96 1,155.60 1,123.01 897.05
</Table>

<Table>
<Caption>
PERCENT CHANGE IN INDEX VALUES
---------------------------------------------------------------------
4/12/01 6/30/01 9/30/01 12/31/01 3/31/02 6/30/02 9/30/02
- -------------------------------------------------------------------------------------------------------------------

BNY Developed Markets 100 ADR Index 100 93.45 78.82 85.46 84.81 79.47 63.75
MSCI EAFE Index 100 95.10 81.49 87.07 87.12 84.66 67.62
</Table>

[BNY DEVELOPED MARKETS 100 ADR INDEX Graph]
27

BNY EMERGING MARKETS 50 ADR INDEX

<Table>
<Caption>
ACTUAL INDEX VALUES
---------------------------------------------------------------------
4/12/01 6/30/01 9/30/01 12/31/01 3/31/02 6/30/02 9/30/02
- --------------------------------------------------------------------------------------------------------------------

BNY Emerging Markets 50 ADR Index 1,008.19 1,068.20 789.55 1,000.94 1,097.16 907.30 696.36
MSCI Emerging Markets Free Index 312.45 322.89 251.40 317.40 351.43 319.75 266.11
</Table>

BNY Emerging Markets 50 ADR Index 100 105.95 78.31 99.28 108.82 89.99 69.07
MSCI Emerging Markets Free Index 100 103.34 80.46 101.58 112.48 102.34 85.17
</Table>

[BNY Emerging Markets 50 ADR Index Graph]

BNY EUROPE 100 ADR INDEX

BNY Europe 100 ADR Index 1,013.00 940.30 810.90 884.42 871.63 808.46 633.42
MSCI AC Europe Index 316.48 296.22 257.23 284.52 295.80 279.84 215.31
</Table>

BNY Europe 100 ADR Index 100 92.82 80.05 87.31 86.04 79.81 62.53
MSCI AC Europe Index 100 93.60 81.28 89.90 87.45 82.73 63.65
</Table>

[BNY Europe 100 ADR Index Graph]

The following table indicates turnover in the components of the BNY ADR
Indexes during the period beginning April 12, 2001 (the date each BNY ADR Index
was first calculated) and ending on September 30, 2002:

<Table>

BNY Asia 50 ADR Index...................................... 28%
BNY Developed Markets 100 ADR Index........................ 30%
BNY Emerging Markets 50 ADR Index.......................... 54%
BNY Europe 100 ADR Index................................... 32%
</Table>

CREATION AND REDEMPTION OF SHARES

Each Fund, a unit investment trust created under the laws of the State of
New York pursuant to the Trust Agreement and Indenture, creates and redeems
Shares only in Creation Unit size aggregations of 50,000 Shares or in multiples
thereof (e.g., 100,000; 150,000; 200,000 Shares) on a continuous basis without a
sales load, at the Fund's NAV next determined after receipt, on any Business
Day, of an order in proper form. Shares may be created or redeemed in one of two
ways: (1) through the "Clearing Process," which means the process of creating or
redeeming Shares through the continuous net settlement system of NSCC by a
participant in the CNS system of NSCC (a "Participating Party"); or (2) outside
of the Clearing Process which means through DTC, by a "DTC Participant", which
party, in each case, must have executed an agreement with the relevant Fund, the
Distributor and the Trustee with respect to the procedure for creations and
redemptions of Creation Units ("Participant Agreement"). The Participating Party
authorizes the Distributor to transmit trade instructions through the Trustee to
NSCC. Participating Parties and DTC Participants are collectively referred to as
"Authorized Participants".

Investors should contact the Distributor for the names of Authorized
Participants that have signed a Participant Agreement.

As of November 8, 2002, the value of the securities comprising a deposit of
designated equity securities necessary for an in-kind purchase of a Creation
Unit for each Fund was as follows:

BLDRS Asia 50 ADR Index Fund -- $2,438,164.

BLDRS Developed Markets 100 ADR Index Fund -- $2,252,462.

BLDRS Emerging Markets 50 ADR Index Fund -- $2,527,735.

BLDRS Europe 100 ADR Index Fund -- $2,247,430.

CREATION OR REDEMPTION OF SHARES THROUGH THE CLEARING PROCESS.

A. CREATION

Shares may be purchased from a Fund only in Creation Unit size aggregations
by tendering to the Trustee an in-kind deposit of a designated portfolio of
equity securities ("Deposit Securities") per each Creation Unit, which
constitutes a substantial replication of the stocks included in the relevant
benchmark BNY ADR Index, a "Cash Component" plus the creation Transaction Fee.
The Cash Component is an amount equal to the dividends on all Fund Securities
with ex-dividend dates within the accumulation period for a dividend
distribution ("Accumulation Period"), net of expenses and liabilities for such
period, as if all the Fund Securities had been held by the Fund for the entire
Accumulation Period, as proscribed by the Trustee, together with the Balancing
Amount (as defined in "Determination of the Portfolio Deposit," below). Together
the Deposit Securities and the Cash Component constitute the "Portfolio
Deposit".

If a Participating Party is restricted by regulation or otherwise from
investing or engaging in a particular Deposit Security, the Participating Party
must substitute the cash equivalent value of such Deposit Security in lieu of
such Deposit Security.

Creation Units may also be purchased in advance of receipt by the Trustee
of all or a portion of the Portfolio Deposit, subject to the following
procedures. In these circumstances, a Participating Party intending to utilize
this procedure will be required to post collateral with the Trustee outside of
the NSCC consisting of: (i) cash at least equal to 115% of the closing value, on
the day the order to purchase Creation Units is deemed received, of the portion
of the Deposit Securities not expected to be available in the account of the
Participating Party for delivery to the BLDRS Index Fund on the third Business
Day following placement of such order, and (ii) such additional deposits as will
reflect daily marked to the market increases (but no decreases) in such value as
determined by the Trustee. This cash collateral will be required to be posted
with the Trustee by 11:00 a.m. on the morning of the Business Day following the
day such order is deemed received by the Distributor, or else the order to
purchase Creation Units will be cancelled. The Trustee will hold such collateral
in an account separate and apart from the BLDRS Index Fund. To the extent that
missing Deposit Securities are not received by a certain time or in the event a
mark to market payment is not made within a certain time following notification
by the Distributor that such a payment is required, the Trustee may use the cash
on deposit to purchase the securities that were to be deposited. An investor
will be liable to the Trustee for the costs incurred in connection with any such
purchases. These costs include the amount by which the actual purchase price of
the Deposit Securities exceeds the market value of such securities on the day
the purchase order was received by the Distributor plus the brokerage and
related transaction costs. The Trustee will return any unused portion of the
cash once all of the missing securities have been properly received by the
Trustee or purchased by the Trustee and deposited into a Fund. The delivery of
Creation Units will occur no later than the third (3rd)

Business Day following the day on which the purchase order is received by the
Distributor.

B. REDEMPTION

Enough Shares must be accumulated in the secondary market to constitute a
Creation Unit in order to have Shares redeemed by a Fund. A FUND WILL NOT REDEEM
SHARES IN AN AMOUNT LESS THAN A CREATION UNIT. 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. Investors should expect to incur
brokerage and other costs in connection with assembling a sufficient number of
Shares to constitute a redeemable Creation Unit.

The redemption proceeds for a Creation Unit generally will be made by each
Fund through delivery of designated Fund Securities ("Redemption
Securities") -- as announced by the Trustee on the Business Day the request for
redemption is received in proper form -- plus cash in an amount equal to the
difference between the NAV of the Shares being redeemed, as next determined
after a receipt of a request in proper form, and the value of the Fund
Securities ("Cash Redemption Amount"), less a redemption Transaction Fee. The
Redemption Securities and the Cash Redemption Amount constitute a "Redemption
Payment". In the event that the Fund Securities have a value greater than the
NAV of the Shares tendered for redemption, a compensating cash payment equal to
the difference must be made by or through an Authorized Participant by or on
behalf of the redeeming shareholder.

If the Trustee determines that a Fund Security is likely to be unavailable
or available in insufficient quantity for delivery by the Trust upon redemption,
the Trustee may elect to deliver the cash equivalent value of any such Fund
Securities, based on its market value as of the Valuation Time on the date such
redemption is deemed received by the Trustee as a part of the Cash Redemption
Amount in lieu thereof.

If a redeemer is restricted by regulation or otherwise from investing or
engaging in a transaction in one or more Fund Securities, the Trustee may elect
to deliver the cash equivalent value based on the market value of any such Fund
Securities as of the Valuation Time on the date of the redemption as a part of
the Cash Redemption Amount in lieu thereof. In such case, the investor will pay
the Trustee the standard Transaction Fee, and may pay an additional amount equal
to the actual amounts incurred in connection with such transaction(s) but in any
case not to exceed three (3) times the Transaction Fee applicable for one
Creation Unit.

At the discretion of the Trustee and NSCC, the Trustee, upon the request of
a redeemer, may elect to redeem Creation Units in whole or in part by providing
such redeemer with a portfolio of Funds Shares that differ in exact composition
and/or weighting from the Index Securities of the relevant BNY ADR Index but not
differing in NAV from the then current Portfolio Deposit. Such a redemption

is likely to be made only if it were determined that it would be appropriate in
order to maintain the Fund's correspondence to the composition and weighting of
its relevant BNY ADR Index.

Orders to redeem Creation Units of the Funds through the Clearing Process
must be delivered through a Participating Party that has executed a Participant
Agreement. The Deposit Securities and the Cash Redemption Amount will be
transferred to the redeeming party by the third (3rd) Business Day following the
date on which such request for redemption is received by the Trustee.

CREATION AND REDEMPTION OF SHARES OUTSIDE THE CLEARING PROCESS.

A. CREATION

Shares may be purchased outside the Clearing Process by using a DTC
Participant who has executed a Participant Agreement and requests such creation
of Creation Units to be affected through a transfer of the Deposit Securities
within the Portfolio Deposit directly through DTC. The Cash Component must be
transferred directly to the Trustee through the Federal Reserve wire system. The
delivery of Creation Units of Shares so created must occur no later than the
third (3rd) Business Day following the day on which the purchase order is
received by the Distributor.

If a Participating Party is restricted by regulation or otherwise from
investing or engaging in a particular Deposit Security, the Participating Party
may substitute the cash equivalent value of such Deposit Security in lieu of
such Deposit Security.

B. REDEMPTION

Orders to redeem Creation Units outside the Clearing Process must be
delivered through a DTC Participant that has executed a Participant Agreement.
Such orders must state that the DTC Participant is not using the Clearing
Process and that redemption of Creation Units will instead be affected through a
transfer of Shares directly through DTC.

After the receipt of an order for redemption outside the Clearing Process,
the Trustee will initiate procedures to transfer the requisite Redemption
Payment to be delivered to the Authorized Participant on behalf of the redeeming
Beneficial Owner by the third (3rd) Business Day following the date on which
such request for redemption is received by the Trustee.

order to maintain the Fund's correspondence to the composition and weighting of
its relevant BNY ADR Index.

REDEMPTIONS WILL BE SUBJECT TO APPLICABLE LAWS.

Redemptions of Shares for Redemption 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 Units for cash to the extent that the Fund could not lawfully
deliver specific Redemption Securities upon redemption or could not do so
without first registering the Redemption Securities under such laws. If an
investor is subject to a legal restriction with respect to a particular
security, the investor may (at the option of the Trustee) be paid an equivalent
amount of cash in lieu of such security. The Authorized Participant may request
the redeeming Beneficial Owner of the Shares to complete an order form or to
enter into agreements with respect to such matters as compensating cash
payments, beneficial ownership of Shares or delivery instructions.

The right of redemption may be suspended or the date of payment postponed
with respect to any Fund: (1) for any period during which the New York Stock
Exchange ("NYSE") is closed (other than customary weekend and holiday closings);
(2) for any period during which trading on the NYSE is suspended or restricted;
(3) for any period during which an emergency exists as a result of which
disposal of Shares or determination of the Shares' NAV is not reasonably
practicable; or (4) in such other circumstance as is permitted by the Securities
and Exchange Commission ("SEC").

CREATION AND REDEMPTION TRANSACTION FEE.

To compensate the Trustee for transfer and other transaction costs involved
in creation and redemption transactions made through the Clearing Process,
investors will be required to pay a "Transaction Fee", payable to the Trustee,
of $10 per each security "name" in the Portfolio Deposit or Redemption Payment,
rounded up to the nearest $500 per Participating Party per day, regardless of
the number of Creation Units purchased or redeemed on such day by such
Participating Party. The amount of the Transaction Fee in effect at any given
time will be made available upon request to the Trustee. An additional charge of
up to three (3) times the Transaction Fee, which fee is expressed as a
percentage of the value of the Portfolio Deposit, may be imposed for (i)
creations and redemptions of Creation Units outside the Clearing Process; and
(ii) cash creations (to offset the Trustee's brokerage and other transaction
costs associated with using cash to purchase the requisite Portfolio Deposit).
Investors are responsible for the costs of transferring the securities
constituting the Portfolio Deposit to the account of a Fund.

Rejecting an Order. The Trustee reserves the absolute right to reject a
creation order transmitted to it by the Distributor in respect of any Fund if:
(a) the order is not in proper form; (b) the investor(s), upon obtaining the
Shares
33

ordered, would own 80% or more of the currently outstanding Shares of any Fund;
(c) the Portfolio Deposit delivered is not as disseminated through the
facilities of NSCC for that date by the Trustee, as described above; (d)
acceptance of the Portfolio Deposit would have certain adverse tax consequences
to the relevant Fund; (e) the acceptance of the Portfolio Deposit would, in the
opinion of counsel, be unlawful; (f) the acceptance of the Portfolio Deposit
would otherwise, in the discretion of the Trustee, have an adverse effect on the
Trust or the rights of Beneficial Owners; or (g) in the event that circumstances
outside the control of the Distributor and the Trustee make it for all practical
purposes impossible to process creation orders. Examples of such circumstances
include acts of God or 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
Trustee, the Distributor, DTC, NSCC or any other party in the creation process,
and similar extraordinary events. The Distributor will notify the Authorized
Participant acting on behalf of the creator of a Creation Unit of its rejection
of the order of such person. The Trustee and the Distributor are under no duty,
however, to give notification of any defects or irregularities in the delivery
of Portfolio Deposits nor will either of them incur any liability for the
failure to give any such notification. In addition, Redemption orders must be
received in the proper form as described in the Participant Agreement.

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

THE PORTFOLIOS

Relationship to the Relevant BNY ADR Index. Because the objective of each
Fund is to provide investment results that correspond generally, before fees and
expenses, to the price and yield performance of the relevant benchmark BNY ADR
Index, a Fund's portfolio of securities is intended to correspond generally to
its relevant benchmark BNY ADR Index and will consist of as many of the
Depositary Receipts comprising the relevant benchmark BNY ADR Index as is
practicable. Cash or cash items (other than dividends held for distribution)
normally would not be a substantial part of a Fund's net assets. Although a Fund
may at any time not own certain of the Index Securities, a Fund will be
substantially invested in Index Securities and the Sponsor believes that such
investment should result in a close correspondence between the investment
performance of the relevant benchmark BNY ADR Index and that derived from
ownership of the Shares of the relevant Fund.

Each of the relevant benchmark BNY ADR Indexes is a capitalization-
weighted index of Depositary Receipts calculated under the auspices of the
Licensor. At any moment in time, the value of a BNY ADR Index equals the
34

aggregate free-float adjusted market capitalization of each of the component
Index Securities, evaluated at their respective last sale prices on NASDAQ, the
NYSE, or the AMEX, divided by a scaling factor ("divisor") which yields a
resulting index value in the reported magnitude.

Change to a BNY ADR Index. Periodically, the Licensor may determine that
total share quantities have changed in one or more Index Securities due to
secondary offerings, repurchases, conversions or other corporate actions. The
Licensor may periodically replace one or more Index Securities in the relevant
benchmark BNY ADR Index due to corporate actions, bankruptcies or other market
conditions, or if the issuers of such Index Securities fail to meet the criteria
for inclusion in the relevant benchmark BNY ADR Index. Ordinarily, whenever
there is a change in share quantities or a change in the Index Securities
included in the relevant benchmark BNY ADR Index, the Licensor adjusts the
divisor to assure that there is no discontinuity in the value of the relevant
benchmark BNY ADR Index. Changes to the relevant benchmark BNY ADR Index will
cause the Trustee to make corresponding portfolio adjustments as described
below.

Adjustments to Portfolios. As set forth in the Trust Agreement and
Indenture, the Trustee will adjust the composition of a Fund's portfolio from
time to time to conform to changes in the composition and/or weighting structure
of the Index Securities of each Fund's relevant benchmark BNY ADR Index. The
Trustee aggregates certain of these adjustments and makes conforming changes to
a Fund's portfolio at least quarterly; however, modifications are made more
frequently in the case of significant changes to the relevant benchmark BNY ADR
Index. Specifically, the Trustee is required to adjust the composition of a
Fund's portfolio any time there is a change in the identity of any Index
Security (i.e., a substitution of one security in replacement of another), which
adjustment is to be made within three (3) Business Days before or after the day
on which the change in the identity of such Index Security is scheduled to take
effect at the close of the market. Although the investment objective of each
Fund is to provide investment results which correspond generally, before fees
and expenses, to the performance of the relevant benchmark BNY ADR Index, it is
not always efficient to replicate identically the share composition of the
relevant benchmark BNY ADR Index if the transaction costs incurred by a Fund in
so adjusting the Fund's portfolio would exceed the expected misweighting that
would ensue by failing to replicate identically minor and insignificant share
changes to the relevant benchmark BNY ADR Index. Accordingly, minor
misweightings are generally permitted subject to the guidelines described in the
following paragraph.

The Trustee is required to adjust the composition of a Fund's portfolio of
securities at any time that the weighting of any security held in a Fund's
portfolio varies in excess of one hundred and fifty percent (150%) of a
specified percentage, which percentage varies from 25/100 of 1% to 2/100 of 1%,
depending on the NAV of the relevant Fund (in each case, the "Misweighting
Amount"), from the weighting of such security held in the Fund's portfolio in
the benchmark BNY ADR Index

(a "Misweighting"). The Trustee will examine each security held in a Fund's
portfolio on each Business Day, comparing the weighting of each such security in
the portfolio to the weighting of the corresponding Index Security in the
relevant benchmark BNY ADR Index, based on prices at the close of the market on
the preceding Business Day (a "Weighting Analysis"). In the event that there is
a Misweighting in any security in excess of one hundred and fifty percent (150%)
of the applicable Misweighting Amount, the Trustee will calculate an adjustment
to the Fund's portfolio in order to bring the Misweighting of such security
within the Misweighting Amount, based on prices at the close of the market on
the day on which such Misweighting occurs. Also, on a monthly basis, the Trustee
will perform a Weighting Analysis for each security held in a Fund's portfolio,
and in any case where there exists a Misweighting exceeding one hundred percent
(100%) of the applicable Misweighting Amount, the Trustee will calculate an
adjustment to the Fund's portfolio in order to bring the Misweighting of such
security within the applicable Misweighting Amount, based on prices at the close
of the market on the day on which such Misweighting occurs. In the case of any
adjustment to a Fund's portfolio due to a Misweighting, the purchase or sale of
securities necessitated by such adjustment will be made within three (3)
Business Days of the day on which the Misweighting is determined. In addition to
the foregoing adjustments, the Trustee reserves the right to make additional
adjustments periodically with respect to a security held in a Fund's portfolio
that may be misweighted by an amount within the applicable Misweighting Amount
in order to reduce the overall Misweighting of a Fund's portfolio.

The foregoing guidelines with respect to Misweightings will also apply to
any Index Security that: (1) is likely to be unavailable for delivery or
available in insufficient quantity for delivery; (2) cannot be delivered to the
Trustee due to restrictions prohibiting a creator from engaging in a transaction
involving such Index Security; or (3) is not eligible to be processed through
the Clearing Process. (From time to time, an Index Security may not be eligible
for transfer through the Clearing Process because such security is not eligible
for transfer through the systems of DTC.) Upon receipt of an order for a
Creation Unit that involves such an Index Security, the Trustee will determine
whether the substitution of cash will cause a Misweighting in a Fund's portfolio
with respect to such Index Security. If a Misweighting results, the Trustee will
purchase the required number of shares of such Index Security on the opening of
the market on the following Business Day.

Pursuant to these guidelines, the Trustee will calculate the required
adjustments and will purchase and sell the appropriate securities. As a result
of the purchase and sale of securities in accordance with these requirements, or
the completion of a creation order, the Trustee may hold some amount of residual
cash (other than cash held temporarily due to timing differences between the
sale and purchase of securities or cash delivered in lieu of Index Securities or
undistributed income or undistributed capital gains) as a result of such
transactions, which amount will not exceed for more than five (5) consecutive
Business Days 5/10th of 1% of the aggregate value of the securities. In the
event that the Trustee has made all required adjustments and is left with cash
in excess
36

of 5/10th of 1% of the aggregate value of the securities held in a Fund's
portfolio, the Trustee will use such cash to purchase additional Index
Securities that are under-weighted in a Fund's portfolio as compared to their
relative weightings in the relevant benchmark BNY ADR Index.

All adjustments to a Fund's portfolio pursuant to these procedures will be
non-discretionary. Portfolio adjustments will be made unless such adjustments
would cause a Fund to lose its status as a "regulated investment company" under
Subchapter M of the Code. Additionally, the Trustee is required to adjust the
composition of a Fund's portfolio at any time if it is necessary to insure the
continued qualification of a Fund as a regulated investment company.

If the method of determining the relevant benchmark BNY ADR Index is
changed by the Licensor, the Trustee and the Sponsor will have the right to
amend the Trust Agreement and Indenture, without the consent of DTC or the
Beneficial Owners, to conform the adjustments to such changes so that a Fund's
objective of tracking the relevant benchmark BNY ADR Index is maintained.

The Trustee will rely on data provided by the Licensor and other financial
industry sources for information as to the composition and weightings of the
Index Securities. If the Trustee cannot obtain or process such information or
NSCC is unable to receive such information from the Trustee on any Business Day,
then the composition and weightings of the Index Securities for the most
recently effective Portfolio Deposit will be used for the purposes of all
adjustments and determinations, and determination of the securities portion of
the Portfolio Deposit until the earlier of: (a) such time as current information
with respect to the Index Securities is available; or (b) three (3) consecutive
Business Days have elapsed. If such current information is not available and
three (3) consecutive Business Days have elapsed, the composition and weightings
of the securities held in a Fund's portfolio (as opposed to the Index
Securities) will be used for the purposes of all adjustments and determinations
and determination of the securities portion of the Portfolio Deposit until
current information with respect to the Index Securities is available.

In the event a Fund is terminated, the Trustee will use the composition and
weightings of the Index Securities as of the date the Trustee received notice of
termination for all redemptions or other required uses of the relevant index.

Mergers Involving Fund Securities. Each Fund, as a shareholder of
securities of an issuer that is the object of such merger or acquisition
activity, may receive various offers from would-be acquirors of the issuer. The
Trustee may not accept any such offers until the Licensor has determined that
the securities of the issuer will be removed from the relevant benchmark BNY ADR
Index. Securities of an issuer are often removed from the relevant benchmark BNY
ADR Index only after the consummation of a merger or acquisition of such an
issuer. In selling the securities of such issuer the Trustee may receive, to the
extent that market prices do not provide a more attractive alternative, whatever
consideration is being offered to the shareholders of such issuer that have not
tendered their shares prior

to such time. Any cash received in such transactions will be reinvested in Index
Securities. Any securities received as a part of the consideration that are not
Index Securities will be sold as soon as practicable and the cash proceeds of
such sale will be reinvested in Index Securities.

Securities Transactions. Purchases and sales of securities held in a
Fund's portfolio resulting from the adjustments may be made in the share amounts
dictated by the foregoing specifications, whether round lot or odd lot. Certain
Index Securities, however, may at times not be available in the required
quantities requested. For this and other reasons, precise duplication of the
proportionate relationship between a Fund's portfolio and its Index Securities
may not ever be possible but nevertheless will continue to be the objective in
connection with all acquisitions and dispositions of Index Securities.

DETERMINATION OF NET ASSET VALUE

NAV per Share for each Fund is computed by dividing the value of net assets
(i.e., the value of the Fund's total assets less total liabilities) by the
Fund's total number of Shares outstanding. The NAV of each Fund is calculated by
the Trustee and determined each Business Day at the close of regular trading of
the NASDAQ (ordinarily 4:00 p.m. New York time). The expenses of the relevant
Fund are reflected in the NAV of its Creation Unit and, proportionately, the NAV
per Share; expenses are accrued daily.

In computing a Fund's NAV per Share, the Fund's Securities are generally
valued based on their last sale price. Price information on listed securities is
taken from the exchange or market where the security is primarily traded. Fund
Securities and assets for which market quotations are not readily available are
valued based on fair market value as determined in good faith by the Trustee in
accordance with procedures set forth in the Trust Agreement and Indenture.

DETERMINATION OF THE PORTFOLIO DEPOSIT

On each Business Day, the number of shares and/or identity of each of the
Index Securities in a Portfolio Deposit is adjusted in accordance with the
following procedure. At the close of the market on each day in which the number
of shares and/or identity of each of the Index Securities in a Portfolio Deposit
is adjusted ("Adjustment Day"), the Trustee calculates the NAV of each Fund. The
NAV is divided by the number of outstanding Shares, multiplied by 50,000 Shares
in one Creation Unit aggregation, resulting in an NAV per Creation Unit ("NAV
Amount"). The Trustee then calculates the number of shares (without rounding) of
each of the component stocks of the relevant benchmark BNY ADR Index in a
Portfolio Deposit for the following Business Day ("Request Day"), such that: (1)
the market value at the close of the market on Adjustment Day of the securities
to be included in the Portfolio Deposit on Request Day, together with the amount
intended to enable a Fund to make a distribution of dividends on the next
dividend payment date as if all the securities in a Fund's portfolio had been
38

held for the entire dividend period ("Dividend Equivalent Payment") as
calculated by the Trustee, effective for requests to create or redeem on
Adjustment Day, equals the NAV Amount; and (2) the identity and weighting of
each of the securities in a Portfolio Deposit mirrors proportionately the
identity and weightings of the securities in the relevant benchmark BNY ADR
Index, each as in effect on Request Day. For each security, the number resulting
from such calculation is rounded to the nearest whole share, with a fraction of
0.50 being rounded up. The identities and number of shares of the securities so
calculated constitute the securities portion of the Portfolio Deposit effective
on Request Day and thereafter until the next subsequent Adjustment Day, as well
as the Index Securities to be delivered by the Trustee in the event of a request
for redemption of Creation Units on Request Day and thereafter until the
following Adjustment Day (see "Creation and Redemption of Shares"). In addition
to the foregoing adjustments, in the event that there will occur a stock split,
stock dividend or reverse split with respect to any Index Security that does not
result in an adjustment to the relevant benchmark BNY ADR Index divisor, the
Portfolio Deposit will be adjusted to take account of such stock split, stock
dividend or reverse split by applying the stock split, stock dividend or reverse
stock split multiple (e.g., in the event of a two-for-one stock split of an
Index Security, by doubling the number of shares of such Index Security in the
prescribed Portfolio Deposit), in each case rounded to the nearest whole share.

On each Request Day the Trustee calculates the market value of the
securities portion of the Portfolio Deposit as in effect on a Request Day as of
the close of the market and adds to that amount the Dividend Equivalent Payment
effective for requests to create or redeem on a Request Day (such market value
and Dividend Equivalent Payment are collectively referred to as the "Portfolio
Deposit Amount"). The Trustee then calculates the NAV Amount, based on the close
of the market on Request Day. The difference between the NAV Amount so
calculated and the Portfolio Deposit Amount is the "Balancing Amount". The
Balancing Amount serves the function of compensating for any differences between
the value of the Portfolio Deposit Amount and the NAV Amount at the close of
trading on Request Day due to, for example, (1) differences in the market value
of the securities in the Portfolio Deposit and the market value of the
Securities on Request Day and (2) any variances from the proper composition of
the Portfolio Deposit.

Notwithstanding the foregoing, on any Adjustment Day on which (a) no change
in the identity and/or share weighting of any Index Security is scheduled to
take effect that would cause the relevant benchmark BNY ADR Index divisor to be
adjusted after the close of the market on such Business Day,(1) and (b) no

- ---------------
1 The Licensor publicly announces changes in the identity and/or the
weighting of the securities in the relevant benchmark BNY ADR Index in advance
of the actual change. The announcements are made after the close of trading on
such day. In the event that the Trustee has included the cash equivalent value
of one or more Index Securities in the Portfolio Deposit because the Trustee has
determined that such
39

- --------------------------------------------------------------------------------
Index Securities are likely to be unavailable or available in insufficient
quantity for delivery, the Portfolio Deposit so constituted will dictate the
Index Securities to be delivered in connection with the creation of Shares in
Creation Unit size aggregations and upon the redemption of Shares in Creation
Unit size aggregations for all purposes hereunder until such time as the
securities portion of the Portfolio Deposit is subsequently adjusted. Brokerage
commissions incurred by the Trustee in connection with the acquisition of any
such Index Securities will be at the expense of a Fund and will affect the value
of all Shares.
40

stock split, stock dividend or reverse stock split with respect to any Index
Security has been declared to take effect on the corresponding Request Day, the
Trustee reserves the right to forego making any adjustment to the Securities
portion of the Portfolio Deposit and to use the composition and weightings of
the Index Securities for the most recently effective Portfolio Deposit for the
Request Day following such Adjustment Day. In addition, the Trustee further
reserves the right to calculate the adjustment to the number of shares and/or
identity of the Index Securities in a Portfolio Deposit as described above
except that such calculation would be employed two (2) Business Days rather than
one (1) Business Day prior to the Request Day.

The Dividend Equivalent Payment and the Balancing Amount in effect at the
close of business on Request Date are collectively referred to as the Cash
Component or the Cash Redemption Payment. If the Balancing
Amount is a positive number (i.e., if the NAV Amount exceeds the Portfolio
Deposit Amount) then, with respect to the creation of Shares, the Balancing
Amount will increase the Cash Component of the then effective Portfolio Deposit
transferred to the Trustee by a creator, and with respect to redemptions of
Shares in Creation Unit size aggregations, the Balancing Amount will be added to
the cash transferred to a redeemer by the Trustee. If the Balancing Amount is a
negative number (i.e., if the NAV Amount is less than the Portfolio Deposit
Amount) then, with respect to the creation of Shares such amount will decrease
the Cash Component of the then effective Portfolio Deposit to be transferred to
the Trustee by the creator or, if such cash portion is less than the Balancing
Amount, the difference will be paid by the Trustee to the creator, and with
respect to redemptions of Shares in Creation Unit size aggregations, the
Balancing Amount will be deducted from the cash transferred to the redeemer or,
if such cash is less than the Balancing Amount, the difference will be paid by
the redeemer to the Trustee.

DISTRIBUTIONS TO BENEFICIAL OWNERS

Quarterly cash distributions, net of fees and expenses, representing
dividends accumulated on the securities held by the relevant Fund through the
quarterly dividend period, accrued daily for such period, will be distributed to
Beneficial Owners on the records of DTC and the DTC Participants on the second
Business Day following the third Friday in each of March, June, September and
December,

unless such day is not a Business Day, in which case the ex-dividend date is the
immediately preceding Business Day. The Trustee may deduct the amount of any tax
or other governmental charge from a distribution before making payment.

The Trustee intends to declare special dividends and make additional
distributions to the minimum extent necessary to maintain each Funds' status as
a regulated investment company: (i) to distribute the entire annual investment
company taxable income of the relevant Fund, plus any net capital gains; and
(ii) to avoid imposition of the excise tax imposed by section 4982 of the Code.
The additional distributions, if needed, would consist of (a) an increase in the
distribution scheduled for January to include any amount by which a Fund's
investment company taxable income and net capital gains as estimated for a year
exceeds the amount of a Fund's taxable income previously distributed with
respect to such year or, if greater, the minimum amount required to avoid
imposition of such excise tax, and (b) a distribution soon after actual annual
investment company taxable income and net capital gains of the relevant Fund
have been computed of the amount, if any, by which such actual income exceeds
the distributions already made. The NAV of the relevant Fund will be reduced in
direct proportion to the amount of such additional distributions. The magnitude
of the additional distributions, if any, will depend upon a number of factors,
including the level of redemption activity experienced by the relevant Fund.
Because substantially all proceeds from the sale of securities in connection
with adjustments to the relevant Fund's Portfolio will have been used to
purchase additional shares of Index Securities, the relevant Fund may have no
cash or insufficient cash with which to pay such additional distributions. In
that case, the Trustee will have to sell shares of the securities sufficient to
produce the cash required to make such additional distributions.

The Trustee may vary the frequency with which periodic distributions are
made (e.g., from quarterly to semi-annually) if it is determined by the Sponsor
and the Trustee that such a variance would be advisable to facilitate compliance
with the rules and regulations applicable to regulated investment companies or
would otherwise be advantageous to a Fund. In addition, the Trustee may change
the regular ex-dividend date for Shares to another date within the month or
quarter if it is determined by the Sponsor and the Trustee, in their discretion,
that this would be advantageous to a Fund. Notice of any change will be
provided.

EXPENSES OF A FUND

Ordinary operating expenses of each Fund are currently being accrued at an
annual rate of 0.30% per year of each Fund's daily NAV; future accruals will
depend primarily on the level of each Fund's net assets and the level of Fund
expenses. There is no guarantee that each Fund's ordinary operating expenses
will not exceed 0.30% per year and under the Trust Agreement and Indenture such
rate may be changed without notice. Therefore, it is possible that, on any day
and during any period over the life of each Fund, total fees and expenses of
each Fund may exceed 0.30% per year.

the question 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.

The Sponsor reserves the right to charge each Fund a special sponsor fee
from time to time in reimbursement for certain services it may provide to each
Fund which would otherwise be provided by the Trustee in an amount not to exceed
the actual cost of providing such services.

In addition to the specific expenses discussed above, the following
expenses are or may be charged to a Fund: (a) reimbursement to the Sponsor of
amounts paid by it to the Licensor in respect of annual licensing fees pursuant
to the License Agreement; (b) federal and state annual registration fees for the
issuance of Shares; and (c) expenses of the Sponsor relating to the printing and
distribution of marketing materials describing Shares of each Fund (including,
but not limited to, associated legal, consulting, advertising and marketing
costs and other out-of-pocket expenses such as printing). Pursuant to the
provisions of an exemptive order, the special sponsor fee and the expenses set
forth in items (a), (b) and (c) in this paragraph may be charged to each Fund by
the Trustee in an amount equal to the actual costs incurred, but in no case will
such charges exceed 0.30% per year of the daily NAV of each Fund.

The initial fees and expenses incurred in connection with the organization
of the Funds and the offering of the Shares of the Funds, estimated at $550,000,
will be borne by the Trustee.

If the income received by a Fund in the form of dividends and other
distributions on the securities in the Fund's portfolio is insufficient to cover
its expenses, the Trustee may make advances to a Fund to cover such expenses,
secured by a lien in the Trustee's favor on the Fund's assets; otherwise the
Trustee may sell securities held in a Fund's portfolio in an amount sufficient
to pay such expenses. The Trustee may reimburse itself in the amount of any such
advance, plus any amounts required by the Federal Reserve Board which are
related to such advances, together with interest thereon at a percentage rate
equal to the then current overnight federal funds rate, by deducting such
amounts from: (1) dividend payments or other income of a Fund when such payments
or other income is received; (2) the amounts earned or benefits derived by the
Trustee on cash held for the benefit of a Fund; and (3) the sale of Securities.
In the event that any advance remains outstanding for more than forty-five (45)
Business Days, the Trustee may sell Fund Shares to reimburse itself for the
amount of such advance and any accrued interest thereon.

In addition to adjustments to a Fund's portfolio from time to time to
conform to changes in the composition or weighting of the Index Securities, the
Trustee is also ordinarily required to sell a Fund's Shares to obtain sufficient
cash proceeds for the payment of a BLDRS Index Fund's fees and expenses at any
time that projected annualized fees and expenses accrued on a daily basis exceed
projected annualized dividends and other Fund income accrued on a daily basis by
more than 1/100th of one percent (0.01%) of the NAV of the relevant Fund.
Whenever

the question 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.

The initial fees and expenses incurred in connection with the organization
of the Funds and the offering of the Shares of the Funds estimated at $550,000,
will be borne by the Trustee.

the 0.01% threshold is exceeded, the Trustee will sell sufficient Fund Shares to
cover such excess by no later than the next occasion it is required to make
adjustments to Fund's portfolio due to a Misweighting unless the Trustee
determines in its discretion, that such a sale is unnecessary because the cash
to be generated is not needed by the Fund at that time for payment of expense
then due or because the Trustee otherwise determines that such sale is not
warranted or advisable. At the time of the sales the Trustee shall first sell a
Fund's Shares that are over weighted as compared to their relative weighting in
the relevant BNY ADR Index.

BOOK-ENTRY ONLY; NOTICES AND DISTRIBUTIONS

DTC acts as securities depository for Shares pursuant to a Depository
Agreement with the Trustee. Shares are represented by a single global security
("Global Security"), which is registered in the name of Cede & Co., as nominee
for DTC and deposited with, or on behalf of, DTC. The Trustee recognizes DTC or
its nominee as the owner of all Shares for purposes except as expressly set
forth in the Trust Agreement and Indenture. Certificates will not be issued for
Shares.

DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934 (the "Exchange Act"). DTC was created to hold
the securities of the DTC Participants and to facilitate the clearance and
settlement of securities transactions among the DTC Participants in such
securities through an electronic book-entry system, 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 own DTC. 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 ("Indirect Participants").

Upon the settlement date of any creation, transfer or redemption of Shares,
DTC will credit or debit, on its book-entry registration and transfer system,
the amount of Shares so created, transferred or redeemed to the accounts of the
appropriate DTC Participants. The accounts to be credited and charged will be
designated by the Trustee to NSCC, in the case of a creation or redemption
through the Clearing Process, or by the Trustee and the DTC Participant, in the
case of a creation or redemption transacted outside of the Clearing Process.
Beneficial Owners will be shown on, and the transfer of ownership will be
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 are expected to receive from or through the DTC Participant a written
confirmation relating to their purchase of Shares. The laws of some
jurisdictions may require that certain
45

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.

Under the Depository Agreement, DTC may determine to discontinue providing
its service with respect to Shares at any time by giving notice to the Trustee
and the Sponsor and discharging its responsibilities with respect thereto under
applicable law. Under such circumstances, the Trustee and the Sponsor will take
action either to find a replacement for DTC to perform its functions at a
comparable cost or, if such a replacement is unavailable, to terminate a Fund.

BUYING AND SELLING SHARES; TRADING INFORMATION

The Shares are listed for secondary trading on NASDAQ. The Shares will
trade on NASDAQ and other securities markets. If you buy or sell Shares in the
secondary market, you will incur customary brokerage commissions and charges and
may pay some or all of the spread between the bid and the offered price in the
secondary market on each leg of a round trip (purchase and sale) transaction.
Shares will trade at prices that may differ to varying degrees from the daily
NAV of the Shares. Given, however, that Shares can be issued and redeemed in
Creation Units, the Sponsor believes that large discounts and premiums to NAV
should not be sustained for very long.

The Trustee will make available daily a list of the names and the required
number of shares of each of the Index Securities in the current Portfolio
Deposit. The Sponsor also intends to make available: (a) on a daily basis, the
Dividend Equivalent Payment effective through and including the previous
Business Day, per outstanding Share; and (b) every 15 seconds throughout the
trading day on NASDAQ a number representing, on a per Share basis, the sum of
the Dividend Equivalent Payment effective through and including the previous
Business Day, plus the current value of the securities portion of a Portfolio
Deposit as in effect on such day (which value may include a cash in lieu amount
to compensate for the omission of a particular Index Security from such
Portfolio Deposit). Intra-day information will be available with respect to
trades and quotes and underlying trading values will be published every 15
seconds throughout the trading day. Information with respect to NAV, net
accumulated dividend, final dividend amount to be paid, shares outstanding,
estimated cash amount and total cash amount per Creation Unit will be available
daily prior to the opening of trading on NASDAQ.

AMENDMENTS TO THE TRUST AGREEMENT AND INDENTURE

The Trust Agreement and Indenture can be amended by the Sponsor and the
Trustee with the consent of 51% of the Beneficial Owners of the relevant Fund to
add provisions to or change or eliminate provisions or to modify the rights of
Beneficial Owners. However, the Trust Agreement and Indenture may not be amended
without the consent of all of the Beneficial Owners of the relevant Fund if such
amendment would: (a) permit, except in accordance with the terms and conditions
of the Trust Agreement and Indenture, the acquisition of any securities other
than those acquired in accordance with the terms and conditions of the Trust
Agreement and Indenture; (b) reduce the interest of any Beneficial Owner in a
Fund; or (c) reduce the percentage of Beneficial Owners required to consent to
any such amendment. Any amendment will be conclusive and binding upon Beneficial
Owners and will be binding upon any Shares. The Trust Agreement and Indenture
may also be amended, in certain limited circumstances, without the consent of
Beneficial Owners.

TERMINATION OF A FUND

If within 90 days from the Initial Date of Deposit the net worth of a Fund
will have fallen to less than $100,000, the Trustee will, upon the direction of
the Sponsor, terminate the Fund and distribute to each Beneficial Owner such
Beneficial Owner's pro rata share of the assets of the Fund. The Sponsor has the
discretionary right to direct the Trustee to terminate the relevant Fund if at
any time after 90 days following and prior to three years following the Initial
Date of Deposit the NAV of a Fund falls below $150,000,000 or if at any time
after three years following the Initial Date of Deposit such value is less than
$350,000,000, adjusted for inflation in accordance with the National Consumer
Price Index for All Urban Consumers ("Discretionary Termination Amount"). Any
such termination will be at the complete discretion of the Sponsor, and the
Sponsor will not be liable in any way for any resulting depreciation or loss.
The Trustee does not have power to terminate the Trust Agreement and Indenture
or a Fund because the value of the Fund is below the Discretionary Termination
Amount. The Trustee will terminate a Fund in the event that the Shares of the
relevant Fund are de-listed from NASDAQ. A Fund may also be terminated upon
receipt by the Trustee of written notice of the occurrence of any one or more of
the following events: (a) by the agreement of the Beneficial Owners of 66 2/3%
of the outstanding Shares; (b) DTC is unable or unwilling to continue to perform
its functions and a comparable replacement is unavailable; (c) NSCC no longer
provides clearance services with respect to the Shares, or the Trustee is no
longer a participant in NSCC; (d) the Licensor ceases publishing each relevant
benchmark BNY ADR Index; or (e) the License Agreement is terminated. If at any
time the Sponsor fails to undertake or perform or becomes incapable of
undertaking or performing any of its duties under the Trust Agreement and
Indenture, or if the Sponsor resigns, the Trustee may, in its discretion, in
lieu of appointing a successor Sponsor, terminate the relevant Fund. A fund will
terminate upon the maturity, redemption, sale or other disposition of the
Depositary Receipts held by a Fund. As soon as practicable after notice of
termination of a Fund, the Trustee will distribute to redeemers tendering
Creation Units prior to the termination date the securities and cash and upon
termination of such Fund the Trustee will thereafter sell the remaining
securities held in such Fund's portfolio as provided below.

Written notice of termination, specifying the date of termination, the
period during which the assets of the relevant Fund will be liquidated and
Creation Units will be redeemed in cash at NAV, and the date determined by the
Trustee upon which the books of the Trustee will be closed, will be given by the
Trustee to each Beneficial Owner at least twenty (20) days prior to termination
of a Fund. Such notice will further state that, as of the date thereof and
thereafter, neither requests to create additional Creation Units nor additional
Portfolio Deposits will be accepted and that, as of the date thereof, the
portfolio of securities delivered upon redemption will be identical in
composition and weighting to the relevant Fund's portfolio rather than the
securities portion of the Portfolio Deposit as in effect on the date request for
redemption is made. Within a reasonable period of time after such termination
the Trustee will, subject to any applicable provisions of law, sell
49

all of the Securities held in the Fund's portfolio not already distributed to
redeemers of Creation Units, as provided herein, if any, in such a manner so as
to effectuate orderly sales and a minimal market impact. The Trustee will not be
liable for or responsible in any way for depreciation or loss incurred by reason
of any sale or sales. The Trustee may suspend its sales of the relevant Fund's
Shares upon the occurrence of unusual or unforeseen circumstances, including,
but not limited to, a suspension in trading of a Index Security, the closing or
restriction of trading on a stock exchange, the outbreak of hostilities or the
collapse of the economy. Upon receipt of proceeds from the sale of the last
security held in the Fund's portfolio, the Trustee will: (1) pay to itself
individually from the Fund an amount equal to the sum of: (a) its accrued
compensation for its ordinary services; (b) any reimbursement due to it for its
extraordinary services; (c) any advances made but not yet repaid; and (d) any
other services and disbursements as provided herein; (2) deduct any and all fees
and expenses from the relevant Fund; (3) deduct from the relevant Fund any
amounts which it will deem requisite to be set aside as reserves for any
applicable taxes or other governmental charges that may be payable out of the
relevant Fund; (4) transmit to DTC for distribution each Beneficial Owner's
interest in the remaining assets of a Fund; and (5) disseminate to each
Beneficial Owner a final statement as of the date of the computation of the
amount distributable to the Beneficial Owners. Dividends to be received by the
Fund on securities held in the Fund's portfolio sold in liquidation will be
aggregated and distributed ratably when all such dividends have been received.

CERTAIN MATERIAL FEDERAL INCOME TAX MATTERS

The following discussion sets forth certain material U.S. Federal income
tax consequences of ownership and disposition of Shares of a Fund.

The Funds intend to qualify for tax treatment as "regulated investment
companies" under Subchapter M of the Code. To qualify as a regulated investment
company, a Fund must, among other things, (a) derive in each taxable year at
least 90% of its gross income from dividends, interest, gains from the sale or
other disposition of stock, securities or foreign currencies, or certain other
sources, derived with respect to a Fund's business of investing in stocks,
securities or currencies, (b) meet certain diversification tests, and (c)
distribute in each year at least 90% of its investment company taxable income.
If a Fund qualifies as a regulated investment company, subject to certain
conditions and requirements, and except as described below, it will not be
subject to federal income tax to the extent its income is distributed in a
timely manner. Any undistributed income may be subject to tax, including a four
percent (4%) excise tax imposed by section 4982 of the Code on certain
undistributed income of a regulated investment company that does not distribute
to shareholders in a timely manner at least ninety-eight percent (98%) of its
taxable income (including capital gains).

Dividends paid by a Fund from its investment company taxable income (which
includes, among other items, dividends, interest and the excess of net
50

short-term capital gains over net long-term capital losses) will be taxable to
Beneficial Owners as ordinary income. A dividend paid in January will be
considered for federal income tax purposes to have been paid by a Fund and
received by Beneficial Owners on the preceding December 31 if the dividend was
declared in the preceding October, November or December to Beneficial Owners of
record as shown on the records of DTC and the DTC Participants on a date in one
of those months. Dividends paid by a Fund will generally not be eligible for the
dividends received deduction for Beneficial Owners that are corporations.

Distributions paid by a Fund from the excess of net long-term capital gains
over net short-term capital losses are considered "capital gains dividends"
regardless of the length of time an investor has owned Shares in the Fund. Any
loss on the sale or exchange of a share held for six months or less may be
treated as a long-term capital loss to the extent of any capital gain dividends
received by the Beneficial Owner. Investors should note that the regular
quarterly dividends paid by a Fund will not be based on the Fund's investment
company taxable income and net capital gain, but rather will be based on the
dividends paid with respect to the Depositary Receipts held by the Fund. As a
result, a portion of the distributions of a Fund may be treated as a return of
capital or a capital gain dividend for federal income tax purposes or a Fund may
make additional distributions in excess of the yield performance of the
Securities in order to distribute all of its investment company taxable income
and net capital gain.

Distributions in excess of a Fund's current or accumulated earnings and
profits (as specially computed) generally will be treated as a return of capital
for federal income tax purposes and will reduce a Beneficial Owner's tax basis
in the Fund. Return of capital distributions may result, for example, if a
portion of the dividends declared represents cash amounts deposited in
connection with Portfolio Deposits rather than dividends actually received by
the Fund. Under certain circumstances, a significant portion of a Fund's regular
quarterly dividends could be treated as return of capital distributions. Such
circumstances may be more likely to occur in periods during which the number of
outstanding Shares fluctuates significantly, as may occur during the initial
years of a Fund. Beneficial Owners will receive annual notification from the
Trustee through the DTC Participants as to the tax status of the Fund's
distributions. A distribution paid shortly after a purchase or creation of
Shares will be taxable even though in effect it may represent a return of
capital.

The sale of Shares of a Fund by a Beneficial Owner is a taxable event, and
may result in a gain or loss, which generally should be a capital gain or loss
for Beneficial Owners that are not dealers in securities.

Dividends received by each Fund may be subject to withholding and other
taxes imposed by foreign countries. Tax conventions between certain countries
and the United States may reduce such taxes. Because more than 50% of the total
assets of each Fund will consist of Depositary Receipts with respect to foreign
securities, each Fund intends to "pass through" certain foreign income taxes
(including withholding taxes) paid by the Fund. This means that Beneficial
51

Owners will be considered to have received, as an additional dividend, their
share of such foreign taxes, but, subject to certain conditions, Beneficial
Owners may be entitled to either a corresponding tax deduction in calculating
their taxable income, or, subject to certain limitations, a credit in
calculating federal income tax.

Adverse federal income tax consequences, including potentially a tax
liability imposed on the Fund, could arise if a Fund holds Depositary Receipts
of an entity that is classified as a "passive foreign investment company" (a
"PFIC") under the Code. In order to avoid such a tax, a Fund may elect to
mark-to-market its PFIC holdings each year. Any net appreciation would then be
treated as ordinary income. Alternatively, under certain conditions, a Fund may
be able to elect to include in income currently its share of the PFIC's ordinary
earnings and long-term capital gains, whether or not such income were actually
distributed by the PFIC. Because it is not always possible to identify an issuer
as a PFIC in a timely manner, a Fund may incur the PFIC tax in some instances;
the PFIC tax can be quite punitive in its operation.

Under the Code, an in-kind redemption of Shares of a Fund will not result
in the recognition of taxable gain or loss by the Fund but generally will
constitute a taxable event for the redeeming shareholder. Upon redemption, a
Beneficial Owner generally will recognize gain or loss measured by the
difference on the date of redemption between the aggregate value of the cash and
securities received and its tax basis in the Shares redeemed. Securities
received upon redemption (which will be comprised of the securities portion of
the Portfolio Deposit in effect on the date of redemption) generally will have
an initial tax basis equal to their respective market values on the date of
redemption. The Internal Revenue Service ("IRS") may assert that any resulting
loss may not be deducted by a Beneficial Owner on the basis that there has been
no material change in such Beneficial Owner's economic position or that the
transaction has no significant economic or business utility apart from the
anticipated tax consequences. Beneficial Owners of Shares in Creation Unit size
aggregations should consult their own tax advisors as to the consequences to
them of the redemption of Shares in a Fund.

Dividend distributions, capital gains distributions, and capital gains from
sales or redemptions may also be subject to state, local and foreign taxes.
Beneficial Owners are urged to consult their tax advisors regarding the
applicability of such taxes to their particular situations.

Deposit of a Portfolio Deposit with the Trustee in exchange for Shares in a
Fund in Creation Unit size aggregations will not result in the recognition of
taxable gain or loss by the Fund but generally will constitute a taxable event
to the depositor under the Code, and a depositor generally will recognize gain
or loss with respect to each security deposited equal to the difference between
the amount realized in respect of the security and the depositor's tax basis
therein. The amount realized with respect to a security deposited should be
determined by allocating the value on the date of deposit of the Fund Shares
received (less any cash paid to the Fund, or plus any cash received from the
Fund, in connection with the deposit) among the securities deposited on the
basis of their respective
52

fair market values at that time. The IRS may assert that any resulting losses
may not be deducted by a depositor on the basis that there has been no material
change in the depositor's economic position or that the transaction has no
significant economic or business utility or purpose apart from the anticipated
tax consequences. Depositors should consult their own tax advisors as to the tax
consequences to them of a deposit to a Fund.

The Trustee has the right to reject the order to create Creation Units
transmitted to it by the Distributor if the depositor or group of depositors,
upon obtaining the Shares ordered, would own eighty percent (80%) or more of the
outstanding Shares of the Fund, and if pursuant to section 351 of the Code such
a circumstance would result in the Fund having a basis in the securities
deposited different from the market value of such securities on the date of
deposit. The Trustee has the right to require information regarding Fund
ownership pursuant to the Participant Agreement and from DTC and to rely thereon
to the extent necessary to make the foregoing determination as a condition to
the acceptance of a Portfolio Deposit.

Ordinary income dividends to Beneficial Owners who are non-resident aliens
will be subject to a thirty percent (30%) United States withholding tax unless a
reduced rate of withholding or a withholding exemption is provided under
applicable tax treaties. If the non-resident Shareholders were to invest
directly in the foreign securities held by the Funds, dividends on such
securities would not be subject to U.S. withholding tax. Furthermore, the
election to "pass-through" foreign income taxes, as described above, will
generally increase the amounts subject to U.S. withholding with no assurance
that the non-resident Shareholders will be able to claim any corresponding
credit or deduction. Non-resident shareholders are urged to consult their own
tax advisors concerning the applicability of United States withholding tax, as
well as United States estate taxes.

"Backup withholding" will apply to dividends, capital gain distributions,
redemptions and sales of Fund Shares unless (a) the Beneficial Owner is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact, or (b) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. The rate
of such backup withholding is 30% for 2002 and 2003, 29% for 2004 and 2005, and
28% for 2006 and thereafter. The amount of any backup withholding from a payment
to a Beneficial Owner will be allowed as a credit against the holder's U.S.
federal income tax liability and may entitle such holder to a refund from the
IRS, provided that the required information is furnished to the IRS.

ERISA CONSIDERATIONS

In considering the advisability of an investment in a Fund, fiduciaries of
pension, profit sharing or other tax-qualified retirement plans (including Keogh
Plans) and welfare plans (collectively, "Plans") subject to the fiduciary
responsi-
53

bility requirements of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), should consider whether an investment in a Fund is permitted
by the documents and instruments governing the Plan and whether the investment
satisfies the exclusive benefit, prudence and diversification requirements of
ERISA. Individual retirement account ("IRA") investors should consider that an
IRA may make only such investments as are authorized by its governing
instruments.

The fiduciary standards and prohibited transaction rules of ERISA and the
Code will not apply to transactions involving Fund Securities while Shares are
held by a Plan or IRA. Unlike many other investment vehicles offered to Plans
and IRAs, Fund Securities will not be treated as "plan assets" of the Plans or
IRAs which acquire or purchase Fund Shares. Although ERISA imposes certain
duties on Plan fiduciaries and ERISA and/or Section 4975 of the Code prohibit
certain transactions involving "plan assets" between Plans or IRAs and their
fiduciaries or certain related persons, those rules will not apply to
transactions involving Fund Securities because Fund Shares represent an interest
in a Fund, and a Fund is registered as an investment company under the 1940 Act.
ERISA, the Code and U.S. Department of Labor regulations contain unconditional
language exempting the assets of registered investment companies from treatment
as "plan assets" in applying the fiduciary and prohibited transaction provisions
of ERISA and the Code.

Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA) and
foreign plans (as described in Section 4(b)(4) of ERISA) are not subject to the
requirements of ERISA or Section 4975 of the Code. The fiduciaries of
governmental plans should, however, consider the impact of their respective
state pension codes on investments in Fund Shares and the considerations
discussed above, to the extent applicable.

The tax discussion set forth above is included for general information
only. Prospective investors should consult their own tax advisors concerning the
federal, state, local and foreign tax consequences to them of an investment in a
Fund, including the effect of possible legislative changes.

THE TRUSTEE

The Trustee is The Bank of New York, a corporation organized under the laws
of the State of New York with trust powers. The Trustee has a trust office at
101 Barclay Street, Floor 6E, New York, NY 10286 and its Internal Revenue
Service Employer Identification Number is 13-5160382. The Trustee holds each
Funds' assets, calculates the NAV of the Shares and calculates net income and
realized capital gains or losses. The Trustee may be reimbursed by a Fund for
its out-of-pocket expenses relating to its services as Trustee (the Funds will
not reimburse expenses of The Bank of New York in its capacity as Licensor). The
Trustee is subject to supervision and examination by the Federal Reserve Bank of

New York, the Federal Deposit Insurance Corporation and the New York State
Banking Department.

For services performed under the Trust Agreement and Indenture, the Trustee
is paid by each Fund a fee at an annual rate of 6/100 of 1% to 10/100 of 1% of
the NAV of each Fund, as shown below, such percentage amount to vary depending
on the NAV of a Fund. Such compensation is computed on each Business Day on the
basis of the NAV of each Fund on such day, and the amount thereof is accrued
daily and paid monthly.

TRUSTEE FEE SCALE

<Table>
<Caption>
NAV OF A FUND FEE AS A PERCENTAGE OF NAV
(IN U.S. DOLLARS ($)) OF A FUND
- ------------------------------------- -------------------------------------

0-499,999,999 10/100 of 1% per year*
500,000,000-2,499,999,999 8/100 of 1% per year*
2,500,000,000 and above 6/100 of 1% per year*
</Table>

- ---------------

* The fee indicated applies to that portion of the NAV of a Fund that falls in
the size category indicated.

The Trustee may resign and be discharged of the Trust created by the Trust
Agreement and Indenture by executing a notice of resignation in writing and
filing such notice with the Sponsor and mailing a copy of the notice of
resignation to all DTC Participants reflected on the records of DTC as owning
Shares for distribution to Beneficial Owners as provided above not less than
sixty (60) days before the date such resignation is to take effect. Such
resignation becomes effective upon the appointment of and the acceptance by the
Trust of a successor Trustee. The Sponsor, upon receiving notice of such
resignation, is obligated to use its best efforts to appoint a successor Trustee
promptly. If no successor is appointed within sixty (60) days after the date
such notice of resignation is given, the Trust shall terminate.

If the Trustee becomes incapable of acting as such or is adjudged bankrupt
or is taken over by any public authority, the Sponsor may discharge the Trustee
and appoint a successor Trustee as provided in the Trust Agreement and
Indenture. The Sponsor shall mail notice of such discharge and appointment via
the DTC Participants to Beneficial Owners. Upon a successor Trustee's execution
of a written acceptance of an appointment as Trustee for the Trust, the
successor Trustee becomes vested with all the rights, powers, duties and
obligations of the original Trustee. A successor Trustee must be: (a) a trust
company, corporation or national banking association organized, doing business
under the laws of the United States or any state thereof; (b) authorized under
such laws to exercise corporate trust powers; and (c) at all times have an
aggregate capital, surplus and undivided profit of not less than $50,000,000.

Beneficial Owners of 51% of the then outstanding Shares may at any time
remove the Trustee by written instrument(s) delivered to the Trustee and the
55

Sponsor. The Sponsor shall thereupon use its best efforts to appoint a successor
Trustee as described above.

The Trust Agreement and Indenture limits the Trustee's liabilities. It
provides, among other things, that the Trustee is not liable for: (a) any action
taken in reasonable reliance on properly executed documents or for the
disposition of monies or stocks or for the evaluations required to be made
thereunder, except by reason of its own gross negligence, bad faith, willful
malfeasance, willful misconduct, or reckless disregard of its duties and
obligations; (b) depreciation or loss incurred by reason of the sale by the
Trustee of any Fund Securities; (c) any action the Trustee takes where the
Sponsor fails to act; and (d) any taxes or other governmental charges imposed
upon or in respect of Fund Securities or upon the interest thereon or upon it as
Trustee or upon or in respect of the Trust which the Trustee may be required to
pay under any present or future law of the United States of America or of any
other taxing authority having jurisdiction.

The Trustee and its directors, subsidiaries, shareholders, officers,
employees, and affiliates under common control with the Trustee will be
indemnified from the assets of the Trust and held harmless against any loss,
liability or expense incurred without gross negligence, bad faith, willful
misconduct, willful malfeasance on the part of such party or reckless disregard
of its duties and obligations, arising out of, or in connection with its
acceptance or administration of the Trust, including the costs and expenses
(including counsel fees) of defending against any claim or liability.

THE SPONSOR

The Sponsor is a Delaware corporation incorporated on August 7, 1998 with
offices at 9513 Key West Avenue, Rockville, Maryland 20850. The Sponsor's
Internal Revenue Service Employer Identification Number is 52-2115391. NASDAQ
owns all of the Sponsor's outstanding shares of common stock. NASDAQ is a
"control person" of the Sponsor as such term is defined in the 1933 Act.

The Sponsor, at its own expense, may from time to time provide additional
promotional incentives to brokers who sell Shares to the public. In certain
instances, these incentives may be provided only to those brokers who meet
certain threshold requirements for participation in a given incentive program,
such as selling a significant number of Shares within a specified period.

If at any time the Sponsor fails to undertake or perform or becomes
incapable of undertaking or performing any of the duties required under the
Trust Agreement and Indenture and such failure is not cured within fifteen (15)
Business Days following receipt of notice from the Trustee, or resigns, or
becomes bankrupt or its affairs are taken over by public authorities, the
Trustee may appoint a successor Sponsor, agree to act as Sponsor itself, or may
terminate the Trust Agreement and Indenture and liquidate the Trust. Notice of
the resignation or removal of the Sponsor and the appointment of a successor
shall be mailed by
56

the Trustee to DTC and the DTC Participants for distribution to Beneficial
Owners. Upon a successor Sponsor's execution of a written acceptance of
appointment as Sponsor of the Trust, the successor Sponsor becomes vested with
all of the rights, powers, duties and obligations of the original Sponsor. Any
successor Sponsor may be compensated at rates deemed by the Trustee to be
reasonable.

The Sponsor may resign by executing and delivering to the Trustee an
instrument of resignation. Such resignation shall become effective upon the
appointment of a successor Sponsor and the acceptance of appointment by the
successor Sponsor, unless the Trustee either agrees to act as Sponsor or
terminates the Trust Agreement and Indenture and liquidates the Trust. The
dissolution of the Sponsor or its ceasing to exist as a legal entity for any
cause whatsoever will not cause the termination of the Trust Agreement and
Indenture or the Trust unless the Trustee deems termination to be in the best
interests of the Beneficial Owners of Shares.

The Trust Agreement and Indenture provides that the Sponsor is not liable
to the Trustee, the Trust or to the Beneficial Owners of Shares for taking any
action, or for refraining from taking any action, made in good faith or for
errors in judgment, but is liable only for its own gross negligence, bad faith,
willful misconduct or willful malfeasance in the performance of its duties or
its reckless disregard of its obligations and duties under the Trust Agreement
and Indenture. The Sponsor is not liable or responsible in any way for
depreciation or loss incurred by the Trust because of the sale of any Fund
Securities. The Trust Agreement and Indenture further provides that the Sponsor
and its directors, subsidiaries, shareholders, officers, employees, and
affiliates under common control with the Sponsor shall be indemnified from the
assets of the Trust and held harmless against any loss, liability or expense
incurred without gross negligence, bad faith, willful misconduct or willful
malfeasance on the part of any such party in the performance of its duties or
reckless disregard of its obligations and duties under the Trust Agreement and
Indenture, including the payment of the costs and expenses of defending against
any claim or liability.

INDEX LICENSE

The Sponsor pays an annual licensing fee to the Licensor equal to 6/100th
of one percent of the aggregate net assets of each Fund, and is reimbursed by
each Fund for such payment. The Licensor will work closely with the Sponsor and
the Distributor to foster the success of the Funds and expects to commit
financial and management resources to the initial and ongoing marketing of the
Shares. The Licensor has incurred all pre-organization expenses of the Funds to
date and has agreed to waive licensing fees in certain circumstances. See
"Expenses of a Fund."

SELECTION CRITERIA, CONSTRUCTION AND MAINTENANCE
STANDARDS FOR THE BNY ADR INDEXES

The BNY ADR Indexes are subindexes of the BNY ADR Composite Index, which is
a composite of all Depositary Receipts in American, Global or New York share
form that are listed for trading on NASDAQ, the NYSE, and the AMEX, subject to
eligibility requirements as stated below.

The "ADR Index Administrator" of the Licensor makes additions to and
removals from each BNY ADR Composite Index by applying specific criteria as set
out in The Bank of New York ADR Index Administration and Procedures Manual which
is described generally below. The decisions of the ADR Index Administrator are
subject to the review of the "ADR Index Committee".

The ADR Index Committee currently consists of 14 individuals ("Members").
Ten Members are employees of the Licensor, while the other four Members are not
employees of The Bank of New York ("Non-Licensor Members"). Two of the
Non-Licensor Members are nominated by the Sponsor's parent, NASDAQ. Members are
subject to strict guidelines which ensure the objectivity and independence of
each Member's decision making.

The Bank of New York has adopted a code of conduct and policy which is
designed to prevent fraud, deception and misconduct against the Trust and each
Fund and provides reasonable standards of conduct for The Bank of New York, its
affiliates and employees. In addition, The Bank of New York has adopted firewall
procedures ("Firewall Procedures") which sets forth internal controls and
procedures at The Bank of New York and its affiliates with respect to the Trust
and the Funds. The purpose of these Firewall Procedures is to: (i) prevent
information regarding the various BNY ADR Indexes from being misused by The Bank
of New York, its affiliates, its employees and Members; and (ii) prevent
manipulation of the BNY ADR Indexes as would result in the prioritizing the
interests of The Bank of New York over the shareholders of the Funds or the
market in general.

The issuers of the Depositary Receipts are subject to SEC registration and
disclosure requirements under U.S. securities laws or have an exemption from
U.S. reporting requirements based on historic listings prior to 1983. Eligible
securities are evaluated to ensure their overall consistency with the character,
design and purpose of each BNY ADR Index, to further its use as an effective
benchmark.

The BNY ADR Indexes are capitalization weighted, using an index formula
based upon the aggregate of prices times share quantities. The number of shares
outstanding used in the index calculation generally represents the entire
class(es) or series that trades in the issuer's local market and that is
eligible to be converted into the form of Depositary Receipts already trading in
the U.S. These shares are adjusted by a "free-float" factor and a Depositary
Receipt conversion ratio, and the result is multiplied by the last sale price as
reported on NASDAQ, the NYSE, or the AMEX. All of the BNY ADR Indexes are
denominated in U.S. dollars and

are calculated on a price only and total rate of return basis, with the
reinvestment of dividends as of the ex-dividend date.

The BNY ADR Indexes are ordinarily calculated every business day on which
the U.S. stock exchanges are open for trading, regardless of regular trading in
local markets.

To be eligible for inclusion in the BNY ADR Indexes, a security must have:

(1) A price greater than or equal to $3, (2) a minimum 3 month average
daily Depositary Receipt trading volume greater than or equal to 25,000
shares, or 125,000 ordinary shares in the local market and (3) Free-float
adjusted market capitalization greater than or equal to $250 million.

In the case of new ADRs with both ADRs and ordinary volume measurable for a
period of less than 3 months, average daily Depositary Receipts trading volume
or local share trading volume for the available time period will be used in the
calculation. In addition, the ADR must trade at least once within any 20 day
period. For re-inclusion in the BNY ADR Indexes, the Depositary Receipts must
trade at least once in 2 consecutive 10 day periods.

Component Depositary Receipts are reviewed quarterly ("Quarterly Review").
During the Quarterly Review, current components (current "members" of the
Indexes) are retained provided that the above eligibility requirements are met
and provided that the free float adjusted market capitalization of the smallest
member is no more than 5% lower than that of the largest eligible non-member not
included in the indexes. Otherwise, the smallest component is replaced with the
largest eligible non-member. The process continues with the second smallest
current member compared to the second largest eligible non-member, and so on.
Moreover, if at any time during the period, a member of one of the Indexes is
dropped, the security will be replaced by the largest eligible non-member.

Quarterly Reviews are ordinarily performed at the close of trading on the
Thursday before the second Friday in March, June, September and December. New
shares will be announced by the Thursday preceding the third Friday in March,
June, September and December. All changes will be made effective prior to the
opening of trading following the third Friday in March, June, September and
December. As stated, the BNY ADR Indexes are capitalization weighted. Current
market capitalization weights of the index components are subject to adjustment
by quarterly index weight rebalancings as described below:

(a) The percent weight of the total index market capitalization represented
by any individual component Depositary Receipts may not exceed 23%,
and,

(b) With respect to 55% of the total index market capitalization, the index
weights of component Depositary Receipts must be diversified so that no
single index component exceeds 4.5%.

Ordinarily, as of the close of trading on the Thursday preceding the second
Friday in March, June, September and December, if one or more index components
exceed either or both of the limits above, the index weights of these component
Depositary Receipts will be reduced and redistributed across the remaining index
component Depositary Receipts that do not exceed these limits. The index
algorithms used for these calculations are available upon request.

The BNY ADR Indexes are monitored and maintained to account for company
additions and deletions, share changes and corporate actions (such as stock
splits, stock dividends, spin-offs, etc.) Some corporate actions, such as stock
splits and stock dividends, require simple changes in the common shares
outstanding and the Depositary Receipts prices of companies in the BNY ADR
Indexes. Such corporate actions, which require no adjustment to a BNY ADR Index
divisor, will be implemented prior to the opening of trading on the effective
date of the corporate action.

Other corporate actions, such as share issuances that change the market
capitalization, may require an adjustment to the index divisor. Index divisor
adjustments are ordinarily made to avoid index discontinuity due to adjustments
made for corporate actions. Divisor adjustments are ordinarily made after the
calculation of the closing value of the BNY ADR Indexes, and prior to the
opening of trading on the effective date of such corporate actions. Constituent
component Depositary Receipts that have share changes less than or equal to 10%
will be adjusted on a quarterly basis along with the Quarterly Review mentioned
above. Depositary Receipts with share changes that affect outstanding shares by
greater than 10% will be adjusted prior to the opening of trading on the date of
effectiveness of the share change.

TYPES OF DEPOSITARY RECEIPT FACILITIES

Companies have a choice of four types of Depositary Receipt facilities:
unsponsored and three levels of sponsored Depositary Receipts. Unsponsored
Depositary Receipts are issued by one or more depositaries in response to market
demand, but without a formal agreement with the company. Sponsored Depositary
Receipts are issued by one depository appointed by the company under a Deposit
Agreement or service contract.

SPONSORED LEVEL I DEPOSITARY RECEIPTS

Although no Fund holds any Level I Depositary Receipts, Level I Depositary
Receipts are traded in the U.S. over-the-counter market and on some exchanges
outside the United States. The company does not have to comply with U.S.
Generally Accepted Accounting Principles ("GAAP") or full SEC disclosure.
Numerous companies such as RTZ, Elf Aquitaine, Glaxo Wellcome, Western Mining,
Hanson, Medeva, Bank of Ireland, Astra, Telebras and Ashanti Gold Fields Company
Ltd. started with a Level I program and have upgraded to a Level II (Listing) or
Level III (Offering) program.

All Depositary Receipts within the BNY ADR Indexes are either Level II or
Level III Depositary Receipts.

SPONSORED LEVEL II AND LEVEL III DEPOSITARY RECEIPTS

Companies that wish to list their securities on an exchange or NASDAQ in
the U.S. use sponsored Level II or Level III Depositary Receipts, respectively.
These types of Depositary Receipts can also be listed on some exchanges outside
the United States. Each level requires different SEC registration and reporting,
plus adherence to GAAP. The companies must also meet the listing requirements of
the national exchange or market (NASDAQ, NYSE, or AMEX), whichever it chooses.

The table below illustrates the percentage of Unsponsored Component
Depositary Receipts for each BNY ADR Index as of September 30, 2002:

<Table>

BNY Asia 50 ADR Index...................................... 4%
BNY Developed Markets 100 ADR Index........................ 3%
BNY Emerging Markets 50 ADR Index.......................... 0%
BNY Europe 100 ADR Index................................... 1%
</Table>

Information regarding the specific level of sponsorship of each component
Depositary Receipt within the BNY ADR Indexes is available on the Licensor's
website (http://www.adrbny.com).

BNY ADR INDEX CALCULATION AND DISSEMINATION

The value of each BNY ADR Index will be calculated continuously and
disseminated every 15 seconds over the Consolidated Tape Association's Network
B. The major electronic financial data vendors -- Bloomberg, Quotron, Reuters
and Bridge Information Systems -- are expected to publish information on each
BNY ADR Index for their subscribers.

Brief descriptions of the BNY ADR Indexes on which the Funds are based and
the equity markets in which the Funds are invested are provided below.

THE BNY ASIA 50 ADR INDEX

GENERAL BACKGROUND

The BNY Asia 50 ADR Index is intended to give investors a benchmark for
tracking the price and yield performance of Depositary Receipts from the Asian
market. A list of the 50 component Depositary Receipts included in The BNY Asia
50 ADR Index as of September 30, 2002 and the industry groups comprising The BNY
Asia 50 ADR Index as of September 30, 2002 is included below.

<Table>
<Caption>
COMPONENT DEPOSITARY RECEIPTS INDUSTRIES/SECTORS
- ----------------------------- ------------------

Toyota Motor Corp Auto/Auto Parts
Mitsubishi Tokyo Financial Group Inc Banking
</Table>

<Table>
<Caption>
COMPONENT DEPOSITARY RECEIPTS INDUSTRIES/SECTORS
- ----------------------------- ------------------

Honda Motor Co Ltd Auto/Auto Parts
Sony Corp Consumer Electronics/Parts
National Australia Bank Ltd Banking
Canon Inc Office Equipment/Supply
Nomura Holdings Financial Services/Investment
Matsushita Elec Indl Co., Inc Electrical Equipment
Taiwan Semiconductor Manft Ltd Tech: Hardware
Nissan Motor Co Ltd Auto/Auto Parts
BHP Billiton Ltd Oil & Gas Services
Hitachi Ltd Electrical Equipment
Australia and N Zealand Banking Grp Banking
Fuji Photo Film Co Ltd Office Equipment/Supply
ITO Yokado Co Ltd Retailing
Westpac Banking Corp Banking
News Corporation Ltd (PDS) Media/Entertainment
Kyocera Corp Consumer Electronics/Parts
Telstra Corp Ltd Telecom/Data Networking
Nippon Telegraph and Telephone Telecom/Data Networking
Kookmin Bank Banking
China Mobile HK Ltd Telecom/Data Networking
SK Telecom Co Ltd Telecom/Data Networking
Mitsui and Company Ltd Multi-Industry
United Microelectronics Corp Tech: Hardware
NEC Corp Consumer Electronics/Parts
News Corporation Ltd Media/Entertainment
KT Corp Telecom/Data Networking
Sanyo Electric Co Ltd Consumer Electronics/Parts
Kirin Brewery Co Ltd Beverage
Infosys Technologies Ltd Tech: Service
TDK Corp Consumer Electronics/Parts
WMC Ltd Mining & Minerals
Coles Myer Ltd Financial Services/Investment
Amcor Ltd Paper & Forest Products
Kubota Corp Engineer-Machinery
Telecom Corp of New Zealand Telecom/Data Networking
CNOOC Ltd Oil & Gas Services
Advantest Corp Electrical Equipment
Korea Electric Power Corp Utilities-Gas, Electric & Water
</Table>

<Table>
<Caption>
COMPONENT DEPOSITARY RECEIPTS INDUSTRIES/SECTORS
- ----------------------------- ------------------

Pioneer Corp Consumer Electronics/Parts
Trend Micro Inc Tech: Software
Nidec Corp Electrical Equipment
CSK Corp Tech: Service
Petrochina Co Oil & Gas Services
POSCO Steel
Santos Ltd Oil & Gas Services
Telekomunikasi Indonesia Telecom/Data Networking
China Unicom Ltd Telecom/Data Networking
James Hardie Industries NV Consumer Electronics/Parts
</Table>

<Table>

AGGREGATE FREE-FLOAT MARKET CAPITALIZATION............. $608,231,483,054
Number of Constituents............................... 50
Percent of Ten Largest Constituents.................. 54.90%
</Table>

10 LARGEST COMPONENTS BY FREE-FLOAT MARKET CAPITALIZATION:

<Table>
<Caption>
FREE-FLOAT MARKET CUMULATIVE
CAPITALIZATION INDEX INDEX
COMPANY NAME (IN U.S. DOLLARS ($)) WEIGHT WEIGHT
- ------------ --------------------- ------ ----------

Toyota Motor Corp................... 82,735,197,663 13.60% 13.60%
Mitsubishi Tokyo Financial Group
Inc............................... 41,913,367,120 6.89% 20.49%
Honda Motor Co Ltd.................. 35,780,248,221 5.88% 26.37%
Sony Corp........................... 35,168,418,860 5.78% 32.15%
National Australia Bank Ltd......... 27,908,954,209 4.59% 36.74%
Canon Inc........................... 25,482,380,292 4.19% 40.93%
Nomura Holdings..................... 25,322,416,200 4.16% 45.09%
Matsushita Elec Indl Co., Inc....... 22,176,410,920 3.65% 48.74%
Taiwan Semiconductor Manft Ltd...... 18,976,548,915 3.12% 51.86%
Nissan Motor Co Ltd................. 18,467,392,349 3.04% 54.90%
Total............................... 54.90%
</Table>

10 LARGEST INDUSTRY GROUPS (% INDEX WEIGHT):

<Table>
<Caption>
FREE-FLOAT MARKET CUMULATIVE
CAPITALIZATION INDEX INDEX
COMPANY NAME (IN U.S. DOLLARS ($)) WEIGHT WEIGHT
- ------------ --------------------- ------ ----------

Auto/Auto Parts..................... 136,982,838,233 22.52% 22.52%
Banking............................. 107,763,356,799 17.72% 40.24%
Consumer Elec/Parts................. 68,868,265,274 11.32% 51.56%
Telecom/Data Networking............. 53,737,342,283 8.84% 60.40%
Electrical Equipment................ 44,066,045,635 7.24% 67.64%
Office Equipment/Supply............. 39,654,701,718 6.52% 74.16%
Financial Services/Investment....... 29,190,069,900 4.80% 78.96%
Tech: Hardware...................... 27,170,476,695 4.47% 83.43%
Oil & Gas/Service................... 25,287,525,621 4.16% 87.59%
Media/Entertainment................. 19,511,719,768 3.21% 90.80%
Total............................... 90.80%
</Table>

THE BNY DEVELOPED MARKETS 100 ADR INDEX

GENERAL BACKGROUND

The BNY Developed Markets 100 ADR Index is intended to give investors a
benchmark for tracking the price and yield performance of Developed Markets
Depositary Receipts. A list of the 100 component Depositary Receipts included in
The BNY Developed Markets 100 ADR Index as of September 30, 2002 and the
industry groups comprising The BNY Developed Markets 100 ADR Index as of
September 30, 2002 is included below.

<Table>
<Caption>
COMPONENT DEPOSITARY RECEIPTS INDUSTRIES/SECTORS
- ----------------------------- ------------------

BP plc Oil & Gas-Services
GlaxoSmithkline Plc Pharmaceuticals/Healthcare
Novartis AG Pharmaceuticals/Healthcare
HSBC Holdings plc Banking
Total Fina Elf S.A. Oil & Gas-Services
Vodafone Group Plc Telecom/Data Networking
Royal Dutch Petroleum Oil & Gas-Services
Toyota Motor Corp Auto/Auto Parts
Nokia Corporation Telecom/Data Networking
Shell Transport and Trading Co Oil & Gas-Services
AstraZeneca PLC Pharmaceuticals/Healthcare
Lloyds TSB Group PLC Banking
Mitsubishi Tokyo Financial Group Inc Banking
Diageo Plc Beverage
Barclays PLC Banking
ENI SPA Oil & Gas-Services
Aventis Chemicals
Honda Motor Co Ltd Auto/Auto Parts
Sony Corp Consumer-Electronics-Parts
Telefonica SA Telecom/Data Networking
Unilever PLC Multi-Industry
Eon AG Multi-Industry
Siemens AG Electrical Equipment
National Australia Bank Ltd Banking
Unilever PC Multi-Industry
Canon Inc Office Equipment/Supply
Nomura Holdings Financial Services/Investment
Banco Santander Central Hispano SA Banking
Banco Bilbao Vizcaya Argentaria S.A. Banking
Credit Suisse Group Financial Services/Investment
</Table>

<Table>
<Caption>
COMPONENT DEPOSITARY RECEIPTS INDUSTRIES/SECTORS
- ----------------------------- ------------------

Ing Groep NV Banking
BT Group plc Telecom/Data Networking
Matsushita Elec Indl Co., Inc Electrical Equipment
Sanofi-Synthelabo Pharmaceuticals/Healthcare
Deutsche Telekom AG Telecom/Data Networking
Basf Aktiengesellschaft Chemicals
Koninklijke Philips Electronics NV Electrical Equipment
Nissan Motor Co Ltd Auto/Auto Parts
BHP Billiton Ltd Oil & Gas-Services
Rio Tinto PLC Mining & Minerals
Anglo American PLC Mining & Minerals
Telecom Italia SPA Telecom/Data Networking
Hitachi Ltd Electrical Equipment
Allianz Aktiengesellschaft Insurance
British American Tobacco PLC Food/Agribus/Tobacco
Groupe Danone Household Products-Appliance
ABN Amro Holding Banking
Suez Services (Bus & Public)
Australia and N Zealand Banking Grp Banking
BG Group plc Utilities-Gas, Electric & Water
Fuji Photo Film Co Ltd Office Equipment/Supply
ITO Yokado Co Ltd Retailing
AXA Insurance
Cadbury Schweppes PLC Beverage
Westpac Banking Corp Banking
National Grid Group PLC Utilities-Gas, Electric & Water
News Corporation Ltd (PDS) Media/Entertainment
Bayer AG Chemicals
Aegon NV Insurance
Kyocera Corp Consumer-Electronics-Parts
Telstra Corp Ltd Telecom/Data Networking
Imperial Tobacco Group PLC Food/Agribus/Tobacco
Repsol YPF SA Oil & Gas-Services
Koninklijke Ahold NV Food/Agribus/Tobacco
Reed Elsevier PLC Media/Entertainment
Vivendi Universal Media/Entertainment
Lafarge Construction & Housebuilding
Prudential PLC Insurance
</Table>

<Table>
<Caption>
COMPONENT DEPOSITARY RECEIPTS INDUSTRIES/SECTORS
- ----------------------------- ------------------

Allied Irish Banks PLC Banking
Nippon Telegraph and Telephone Telecom/Data Networking
Bank of Ireland Banking
Scottish Power PLC Utilities-Gas, Electric & Water
British Sky Broadcasting Group PLC Media/Entertainment
Enel SpA Utilities-Gas, Electric & Water
SAP AG Tech: Software
Endesa SA Utilties-Gas, Electric & Water
Royal KPN NV Telecom/Data Networking
Schering Aktiengesellschaft Pharmaceuticals/Healthcare
Reed Elsevier NV Printing & Publishing
Six Continents PLC Hotel & Leisure
Mitsui and Company Ltd Multi-Industry
Akzo Nobel NV Chemicals
LVMH Moet Hennessy Louis Vuitton Luxury Goods
WPP Group PLC Printing & Publishing
STMicroelectronics NV Tech: Hardware
NEC Corp Consumer-Electronics-Parts
UPM Kymmene Corp Paper & Forest Products
Allied Domecq PLC Beverage
News Corporation Ltd Media/Entertainment
Sanpaola IMI S.p.A Banking
BOC Group Plc Chemicals
Pearson Plc Sp Printing & Publishing
Sanyo Electric Co Ltd Consumer-Electronics-Parts
Gallaher Group PLC Food/Agribus/Tobacco
CRH PLC Construction & Housebuilding
Stora Enso OYJ Paper & Forest Products
Novo Nordisk Pharmaceuticals/Healthcare
Amersham Plc Biotechnology
Norsk Hydro Chemicals
Portugal Telecom SGPS SA Telecom/Data Networking
</Table>

<Table>

AGGREGATE FREE-FLOAT MARKET CAPITALIZATION........... $2,431,363,269,168
Number of Constituents............................. 100
Percent of Ten Largest Constituents................ 38.51%
</Table>

10 LARGEST COMPONENTS BY FREE-FLOAT MARKET CAPITALIZATION:

<Table>
<Caption>
FREE-FLOAT MARKET CUMULATIVE
CAPITALIZATION INDEX INDEX
COMPANY NAME (IN U.S. DOLLARS ($)) WEIGHT WEIGHT
- ------------ --------------------- ------ ----------

BP plc.............................. 149,389,614,738 6.14% 6.14%
GlaxoSmithkline Plc................. 116,386,533,336 4.79% 10.93%
Novartis AG......................... 105,022,456,812 4.32% 15.25%
HSBC Holdings plc................... 97,294,214,160 4.00% 19.25%
Total Fina Elf S.A.................. 93,338,841,884 3.84% 23.09%
Vodafone Group Plc.................. 87,424,707,368 3.60% 26.69%
Royal Dutch Petroleum............... 84,101,920,500 3.46% 30.15%
Toyota Motor Corp................... 82,735,197,663 3.40% 33.55%
Nokia Corporation................... 62,980,257,710 2.59% 36.14%
Shell Transport and Trading Co...... 57,696,935,390 2.37% 38.51%
Total 38.51%
</Table>

10 LARGEST INDUSTRY GROUPS (% INDEX WEIGHT):

<Table>
<Caption>
FREE-FLOAT MARKET CUMULATIVE
CAPITALIZATION INDEX INDEX
INDUSTRY (IN U.S. DOLLARS ($)) WEIGHT WEIGHT
- -------- --------------------- ------ ----------

Oil & Gas/Service................... 452,441,522,680 18.61% 18.61%
Banking............................. 391,828,352,148 16.12% 34.73%
Pharmaceuticals/Healthcare.......... 308,099,945,524 12.67% 47.40%
Telecom/Data Networking............. 279,864,823,480 11.51% 58.91%
Auto/Auto Parts..................... 136,982,838,233 5.63% 64.54%
Multi-Industry...................... 99,041,417,387 4.07% 68.61%
Chemicals........................... 87,648,844,517 3.60% 72.21%
Electrical Equipment................ 85,229,399,261 3.51% 75.72%
Beverage............................ 62,303,450,517 2.56% 78.28%
Consumer Elec/Parts................. 60,759,289,474 2.50% 80.78%
Total 80.78%
</Table>

THE BNY EMERGING MARKETS 50 ADR INDEX

GENERAL BACKGROUND

The BNY Emerging Markets 50 ADR Index is intended to give investors a
benchmark for tracking the price and yield performance of Emerging Markets
Depositary Receipts. A list of the 50 component Depositary Receipts included in
The BNY Emerging Markets 50 ADR Index as of September 30, 2002 and the industry
groups comprising The BNY Emerging Markets 50 ADR Index as of September 30, 2002
is included below.

<Table>
<Caption>
COMPONENT DEPOSITARY RECEIPTS INDUSTRIES/SECTORS
- ----------------------------- --------------------------------

Taiwan Semiconductor Manft Ltd........... Tech: Hardware
Telefonos de Mexico SA de CV............. Telecom/Data Networking
Kookmin Bank............................. Banking
China Mobile HK Ltd...................... Telecom/Data Networking
SK Telecom Co Ltd........................ Telecom/Data Networking
Teva Pharmaceutical Ind.................. Pharmaceuticals/Healthcare
United Microelectronics Corp............. Tech: Hardware
KT Corp.................................. Telecom/Data Networking
Sasol Ltd................................ Oil & Gas Services
Cemex SA................................. Construction/Housebuilding
Infosys Technologies Ltd................. Tech: Service
America Movil SA......................... Telecom/Data Networking
Gold Fields Ltd.......................... Mining & Minerals
Petroleo Brasileiro SA................... Oil & Gas Services
CNOOC Ltd................................ Oil & Gas Services
Petroleo Brasileiro SA................... Oil & Gas Services
Mobile Telesystems OJSC.................. Telecom/Data Networking
Companhia Vale Do Rio Doce............... Mining & Minerals
Korea Electric Power Corp................ Utilities-Gas, Electric & Water
Anglogold Ltd............................ Mining & Minerals
Companhia Vale Do Rio Doce............... Mining & Minerals
Harmony Gold Mining Company Ltd.......... Mining & Minerals
Companhia de Bebidas das Americas........ Beverage
Sappi Ltd................................ Paper & Forest Products
Petrochina Co............................ Oil & Gas Services
Grupo Televisa SA........................ Media-Entertainment
POSCO.................................... Steel
Telekomunikasi Indonesia................. Telecom/Data Networking
China Unicom Ltd......................... Telecom/Data Networking
Banco Itau............................... Banking
</Table>

<Table>
<Caption>
COMPONENT DEPOSITARY RECEIPTS INDUSTRIES/SECTORS
- ----------------------------- --------------------------------

China Petroleum and Chemical Corp........ Oil & Gas Services
Fomento Economico Mexicano SA............ Beverage
Satyam Computer Services Ltd............. Tech: Service
Tele Norte Leste Participacoes SA........ Telecom/Data Networking
HDFC Bank Ltd............................ Banking
AU Optronics Corp........................ Tech: Hardware
Magyar Tavkozlesirt...................... Telecom/Data Networking
Compania De Minas Buenaventura SA........ Mining & Minerals
Icici Bank Ltd........................... Banking
Huaneng Power International Inc.......... Utilities-Gas, Electric & Water
AO Tatneft............................... Oil & Gas Services
Banco Bradesco SA........................ Banking
Compania De Telecomunicaciones De Telecom/Data Networking
Chile..................................
Embraer Emp. Brasileira de Aeronautica... Aerospace/Defense Elec.
Wipro Ltd................................ Tech: Service
Brasil Telecom Participacoes SA.......... Telecom/Data Networking
Dr Reddys Laboratories Ltd............... Pharmaceuticals/Healthcare
Macronix International Co Ltd............ Tech: Service
Vimpel Communications.................... Telecom/Data Networking
Unibanco Uniao de Bancos Brasileros...... Banking
</Table>

<Table>

AGGREGATE FREE-FLOAT MARKET CAPITALIZATION............ $174,316,421,767
Number of Constituents.............................. 50
Percent of Ten Largest Constituents................. 53.99%
</Table>

10 LARGEST COMPONENTS BY FREE-FLOAT MARKET CAPITALIZATION:

<Table>
<Caption>
FREE-FLOAT MARKET CUMULATIVE
CAPITALIZATION INDEX INDEX
COMPANY NAME (IN U.S. DOLLARS ($)) WEIGHT WEIGHT
- ------------ --------------------- ------ ----------

Taiwan Semiconductor Manft Ltd...... 18,976,548,915 10.89% 10.89%
Telefonos de Mexico SA de CV........ 10,426,253,300 5.98% 16.87%
Kookmin Bank........................ 10,170,298,880 5.83% 22.70%
China Mobile HK Ltd................. 9,322,829,565 5.35% 28.05%
SK Telecom Co Ltd................... 8,800,003,948 5.05% 33.10%
Teva Pharmaceutical Ind............. 8,570,372,000 4.92% 38.02%
United Microelectronics Corp........ 8,193,927,780 4.70% 42.72%
KT Corp............................. 6,786,104,080 3.89% 46.61%
Sasol Ltd........................... 6,446,876,107 3.70% 50.31%
Cemex SA............................ 6,411,195,044 3.68% 53.99%
Total............................... 53.99%
</Table>

10 LARGEST INDUSTRY GROUPS (% INDEX WEIGHT):

<Table>
<Caption>
FREE-FLOAT MARKET CUMULATIVE
CAPITALIZATION INDEX INDEX
INDUSTRY (IN U.S. DOLLARS ($)) WEIGHT WEIGHT
- -------- --------------------- ------ ----------

Telecom/Data Networking............. 52,008,533,051 29.84% 29.84%
Tech: Hardware...................... 28,499,692,765 16.35% 46.19%
Oil & Gas/Service................... 20,964,330,562 12.03% 58.22%
Mining & Minerals................... 16,711,514,668 9.59% 67.81%
Banking............................. 15,969,216,233 9.16% 76.97%
Pharmaceuticals/Healthcare.......... 9,545,208,904 5.48% 82.45%
Tech: Service....................... 8,522,140,497 4.89% 87.34%
Construction and Housebuilding...... 6,411,195,044 3.68% 91.02%
Utilities-Gas, Elec & Water......... 4,164,321,165 2.39% 93.41%
Beverage............................ 3,967,295,830 2.28% 95.69%
Total............................... 95.69%
</Table>

THE BNY EUROPE 100 ADR INDEX

GENERAL BACKGROUND

The BNY Europe 100 ADR Index is intended to give investors a benchmark for
tracking the price and yield performance of European Depositary Receipts. A list
of the 100 component Depositary Receipts included in The BNY Europe 100 ADR
Index as of September 30, 2002 and the industry groups comprising The BNY Europe
100 ADR Index as of September 30, 2002 is included below.

<Table>
<Caption>
COMPONENT DEPOSITARY RECEIPTS INDUSTRIES/SECTORS
- ----------------------------- ------------------

BP plc.................................... Oil & Gas Services
GlaxoSmithkline Plc....................... Pharmaceuticals/Healthcare
Novartis AG............................... Pharmaceuticals/Healthcare
HSBC Holdings plc......................... Banking
Total Fina Elf S.A........................ Oil & Gas Services
Vodafone Group Plc........................ Telecom/Data Networking
Royal Dutch Petroleum..................... Oil & Gas Services
Nokia Corporation......................... Telecom/Data Networking
Shell Transport and Trading Co............ Oil & Gas Services
AstraZeneca PLC........................... Pharmaceuticals/Healthcare
Lloyds TSB Group PLC...................... Banking
Diageo Plc................................ Beverage
Barclays PLC.............................. Banking
ENI SPA................................... Oil & Gas Services
Aventis................................... Chemicals
Telefonica SA............................. Telecom/Data Networking
Unilever NV............................... Multi-Industry
Eon AG.................................... Multi-Industry
Siemens AG................................ Electrical Equipment
Unilever PLC.............................. Multi-Industry
Banco Santander Central Hispano SA........ Banking
Banco Bilbao Vizcaya Argentaria S.A....... Banking
Credit Suisse Group....................... Financial Services/Investment
Ing Groep NV.............................. Banking
BT Group plc.............................. Telecom/Data Networking
Sanofi-Synthelabo......................... Pharmaceuticals/Healthcare
Deutsche Telekom AG....................... Telecom/Data Networking
Basf Aktiengesellschaft................... Chemicals
Koninklijke Philips Electronics NV........ Electrical Equipment
Rio Tinto PLC............................. Mining & Minerals
Anglo American Plc........................ Mining & Minerals
</Table>

<Table>
<Caption>
COMPONENT DEPOSITARY RECEIPTS INDUSTRIES/SECTORS
- ----------------------------- ------------------

Telecom Italia SPA........................ Telecom/Data Networking
Allianz Aktiengesellschaft................ Insurance
British American Tobacco PLC.............. Food/Agribus/Tobacco
Groupe Danone............................. Household Products/Appliances
ABN Amro Holding.......................... Banking
Suez...................................... Services (Bus & Public)
BG Group plc.............................. Utilities-Gas, Electric &
Water
AXA....................................... Insurance
Cadbury Schweppes PLC..................... Beverage
National Grid Group PLC................... Utilities-Gas, Electric &
Water
Bayer AG.................................. Chemicals
Aegon NV.................................. Insurance
Imperial Tobacco Group PLC................ Food/Agribus/Tobacco
Repsol YPF SA............................. Oil & Gas Services
Koninklijke Ahold NV...................... Food/Agribus/Tobacco
Reed Elsevier PLC......................... Media-Entertainment
Vivendi Universal......................... Media-Entertainment
Lafarge................................... Construction/Housebuilding
Prudential PLC............................ Insurance
Allied Irish Banks PLC.................... Banking
Bank of Ireland........................... Banking
Scottish Power PLC........................ Utilities-Gas, Electric &
Water
British Sky Broadcasting Group PLC........ Media-Entertainment
Enel SpA.................................. Utilities-Gas, Electric &
Water
SAP AG.................................... Tech: Software
Endesa SA................................. Utilities-Gas, Electric &
Water
Royal KPN NV.............................. Telecom/Data Networking
Schering Aktiengesellschaft............... Pharmaceuticals/Healthcare
Reed Elsevier NV.......................... Printing & Publishing
Six Continents PLC........................ Hotel & Leisure
Akzo Nobel NV............................. Chemicals
LVMH Moet Hennessy Louis Vuitton.......... Luxury Goods
WPP Group PLC............................. Printing & Publishing
STMicroelectronics NV..................... Tech: Hardware
UPM Kymmene Corp.......................... Paper & Forest Products
Allied Domecq PLC......................... Beverage
Sanpaola IMI S.p.A........................ Banking
BOC Group Plc............................. Chemicals
</Table>

<Table>
<Caption>
COMPONENT DEPOSITARY RECEIPTS INDUSTRIES/SECTORS
- ----------------------------- ------------------

Pearson Plc Sp............................ Printing & Publishing
Gallaher Group PLC........................ Food/Agribus/Tobacco
CRH PLC................................... Construction/Housebuilding
Stora Enso OYJ............................ Paper & Forest Products
Novo Nordisk.............................. Pharmaceuticals/Healthcare
Amersham Plc.............................. Biotechnology
Swisscom AG............................... Telecom/Data Networking
Norsk Hydro............................... Chemicals
Syngenta.................................. Chemicals
mmO2 Plc.................................. Telecom/Data Networking
United Utilities.......................... Utilities-Gas, Electric &
Water
TPG NV.................................... Services (Bus & Public)
Portugal Telecom SGPS SA.................. Telecom/Data Networking
Reuters Grp PLC........................... Media-Entertainment
Smith and Nephew Plc...................... Pharmaceuticals/Healthcare
Electrolux AB Class B..................... Household Products/Appliances
P and O Princess Cruises plc.............. Media-Entertainment
Ryanair Holdings Plc...................... Airlines
Wolseley plc.............................. Construction/Housebuilding
Ciba Specialty Chem Hld Reg Sh............ Chemicals
Vivendi Environnement..................... Services (Bus & Public)
Banco Commercial Portugues SA............. Banking
Adecco SA................................. Multi-Industry
Cable and Wireless PLC.................... Telecom/Data Networking
Shire Pharm Group......................... Pharmaceuticals/Healthcare
Imperial Chemical Industries PLC.......... Chemicals
Amvescap Plc.............................. Financial Services/Investment
Hanson PLC................................ Multi-Industry
ABB Ltd................................... Engineer-Machinery
France Telecom............................ Telecom/Data Networking
ALCATEL................................... Telecom/Data Networking
</Table>

<Table>

AGGREGATE FREE-FLOAT MARKET CAPITALIZATION........... $2,052,641,317,381
Number of Constituents............................. 100
Percent of Ten Largest Constituents................ 44.04%
</Table>

10 LARGEST COMPONENTS BY FREE-FLOAT MARKET CAPITALIZATION:

<Table>
<Caption>
FREE-FLOAT MARKET CUMULATIVE
CAPITALIZATION INDEX INDEX
COMPANY NAME (IN U.S. DOLLARS ($)) WEIGHT WEIGHT
- ------------ --------------------- ------ ----------

BP plc............................. 149,389,614,738 7.28% 7.28%
GlaxoSmithkline Plc................ 116,386,533,336 5.67% 12.95%
Novartis AG........................ 105,022,456,812 5.12% 18.07%
HSBC Holdings plc.................. 97,294,214,160 4.74% 22.81%
Total Fina Elf S.A. ............... 93,338,841,884 4.55% 27.36%
Vodafone Group Plc................. 87,424,707,368 4.26% 31.62%
Royal Dutch Petroleum.............. 84,101,920,500 4.10% 35.72%
Nokia Corporation.................. 62,980,257,710 3.07% 38.79%
Shell Transport and Trading Co..... 57,696,935,390 2.81% 41.60%
AstraZeneca PLC.................... 50,082,642,230 2.44% 44.04%
Total.............................. 44.04%
</Table>

10 LARGEST INDUSTRY GROUPS (% INDEX WEIGHT):

<Table>
<Caption>
FREE-FLOAT MARKET CUMULATIVE
CAPITALIZATION INDEX INDEX
INDUSTRY (IN U.S. DOLLARS ($)) WEIGHT WEIGHT
- -------- --------------------- ------ ----------

Oil & Gas/Service.................. 434,335,142,625 21.16% 21.16%
Pharmaceuticals/Healthcare......... 317,181,661,376 15.45% 36.61%
Banking............................ 298,490,446,234 14.54% 51.15%
Telecom/Data Networking............ 278,520,645,564 13.57% 64.72%
Chemicals.......................... 101,386,238,733 4.94% 69.66%
Multi-Industry..................... 98,626,585,727 4.80% 74.46%
Beverage........................... 62,303,450,517 3.04% 77.50%
Utilities -- Gas, Electric &
Water............................ 60,839,488,779 2.96% 80.46%
Insurance.......................... 52,809,366,374 2.57% 83.03%
Electrical Equipment............... 46,510,355,941 2.27% 85.30%
Total.............................. 85.30%
</Table>

The information contained herein regarding the BNY ADR Indexes, securities
markets and DTC was obtained from publicly available sources.

"BNY", "The Bank of New York Asia 50 ADR Index", "The Bank of New York
Developed Markets 100 ADR Index", "The Bank of New York Emerging Markets 50 ADR
Index", "The Bank of New York Europe 100 ADR Index", and "The BNY Asia 50 ADR
Index", "The BNY Developed Markets 100 ADR Index", "The BNY Emerging Markets 50
ADR Index", "The BNY Europe 100 ADR Index" are service marks of The Bank of New
York and have been licensed for use for certain purposes by Nasdaq Financial
Products Services, Inc., the

BLDRS Index Funds Trust, BLDRS Asia 50 ADR Index Fund, BLDRS Developed Markets
100 ADR Index Fund, BLDRS Emerging Markets 50 ADR Index Fund and BLDRS Europe
100 ADR Index Fund based on The Bank of New York Asia 50 ADR Index, The Bank of
New York Developed Markets 100 ADR Index, The Bank of New York Emerging Markets
50 ADR Index and The Bank of New York Europe 100 ADR Index are not sponsored,
endorsed, sold, recommended or promoted by The Bank of New York or any of its
subsidiaries or affiliates, and none of The Bank of New York or any of its
subsidiaries or affiliates makes any representation or warranty, express or
implied, to the purchasers or owners of the BLDRS Index Funds Trust, BLDRS Asia
50 ADR Index Fund, BLDRS Developed Markets 100 ADR Index Fund, BLDRS Emerging
Markets 50 ADR Index Fund or BLDRS Europe 100 ADR Index Fund or any member of
the public regarding the advisability of investing in financial products
generally or in the BLDRS Index Funds Trust, BLDRS Asia 50 ADR Index Fund, BLDRS
Developed Markets 100 ADR Index Fund, BLDRS Emerging Markets 50 ADR Index Fund
or the Bank of New York Europe 100 ADR Index particularly, the ability of The
Bank of New York Asia 50 ADR Index, The Bank of New York Developed Markets 100
ADR Index, The Bank of New York Emerging Markets 50 ADR Index and The Bank of
New York Europe 100 ADR Index to track market performance or the suitability or
appropriateness of the BLDRS Index Funds Trust, BLDRS Asia 50 ADR Index Fund,
BLDRS Developed Markets 100 ADR Index Fund, BLDRS Emerging Markets 50 ADR Index
Fund or BLDRS Europe 100 ADR Index Fund for such purchasers, owners or such
members of the public. The relationship between The Bank of New York, as
Licensor, on one hand, and Nasdaq Financial Products Services, Inc., as Sponsor,
on the other, is limited to the licensing of certain trademarks and trade names
of The Bank of New York and of The Bank of New York Asia 50 ADR Index, The Bank
of New York Developed Markets 100 ADR Index, The Bank of New York Emerging
Markets 50 ADR Index or The Bank of New York Europe 100 ADR Index which indices
are determined, composed and calculated by The Bank of New York without regard
to Nasdaq Financial Products Services, Inc. or the BLDRS Index Funds Trust,
BLDRS Asia 50 ADR Index Fund, BLDRS Developed Markets 100 ADR Index Fund, BLDRS
Emerging Markets 50 ADR Index Fund or BLDRS Europe 100 ADR Index Fund. Neither
The Bank of New York nor any of its subsidiaries or affiliates has any
obligation to take the needs of Nasdaq Financial Products Services, Inc. or the
purchasers or owners of the BLDRS Index Funds Trust, BLDRS Asia 50 ADR Index
Fund, BLDRS Developed Markets 100 ADR Index Fund, BLDRS Emerging Markets 50 ADR
Index Fund or BLDRS Europe 100 ADR Index Fund into consideration in determining,
composing or calculating The Bank of New York Asia 50 ADR Index, The Bank of New
York Developed Markets 100 ADR Index, The Bank of New York Emerging Markets 50
ADR Index or The Bank of New York Europe 100 ADR Index. Neither The Bank of New
York nor any of its subsidiaries or affiliates is responsible for, or has
participated in, the determination of the timing of, prices at, or quantities of
the BLDRS Asia 50 ADR Index Fund, BLDRS Developed Markets 100 ADR Index Fund,
BLDRS Emerging Markets 50 ADR Index Fund or BLDRS Europe

100 ADR Index Fund to be issued or in the determination or calculation of the
equation by which the BLDRS Index Funds Trust, BLDRS Asia 50 ADR Index Fund,
BLDRS Developed Markets 100 ADR Index Fund, BLDRS Emerging Markets 50 ADR Index
Fund and BLDRS Europe 100 ADR Index Fund is to be converted into cash.

NEITHER THE BANK OF NEW YORK NOR ANY OF ITS SUBSIDIARIES OR AFFILIATES
GUARANTEES THE ACCURACY OR COMPLETENESS OF THE BANK OF NEW YORK ASIA 50 ADR
INDEX, THE BANK OF NEW YORK DEVELOPED MARKETS 100 ADR INDEX, THE BANK OF NEW
YORK EMERGING MARKETS 50 ADR INDEX OR THE BANK OF NEW YORK EUROPE 100 ADR INDEX
OR ANY DATA INCLUDED THEREIN, AND NEITHER THE BANK OF NEW YORK NOR ANY OF ITS
SUBSIDIARIES OR AFFILIATES WILL HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS OR
INTERRUPTIONS THEREIN. NEITHER THE BANK OF NEW YORK NOR ANY OF ITS SUBSIDIARIES
OR AFFILIATES MAKE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE
OBTAINED BY NASDAQ FINANCIAL PRODUCTS SERVICES, INC., PURCHASERS OR OWNERS OF
THE BLDRS INDEX FUNDS TRUST, BLDRS ASIA 50 ADR INDEX FUND, BLDRS DEVELOPED
MARKETS 100 ADR INDEX FUND, BLDRS EMERGING MARKETS 50 ADR INDEX FUND, BLDRS
EUROPE 100 ADR INDEX FUND OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE BANK
OF NEW YORK ASIA 50 ADR INDEX, THE BANK OF NEW YORK DEVELOPED MARKETS 100 ADR
INDEX, THE BANK OF NEW YORK EMERGING MARKETS 50 ADR INDEX OR THE BANK OF NEW
YORK EUROPE 100 ADR INDEX OR ANY DATA INCLUDED THEREIN. NEITHER THE BANK OF NEW
YORK NOR ANY OF ITS SUBSIDIARIES OR AFFILIATES MAKES ANY EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE BANK OF NEW YORK ASIA 50 ADR
INDEX, THE BANK OF NEW YORK DEVELOPED MARKETS 100 ADR INDEX, THE BANK OF NEW
YORK EMERGING MARKETS 50 ADR INDEX, THE BANK OF NEW YORK EUROPE 100 ADR INDEX OR
ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT
WILL THE BANK OF NEW YORK OR ANY OF ITS SUBSIDIARIES OR AFFILIATES HAVE ANY
LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES
(INCLUDING, WITHOUT LIMITATION, LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.

The foregoing disclaimer does not impact The Bank of New York's fiduciary
duty owed by it to each Fund and the shareholders of each Fund in its capacity
as Trustee of each Fund.

ADDITIONAL INFORMATION CONCERNING THE
ROLE OF THE BANK OF NEW YORK, DOW JONES AND NASDAQ

The Depositary Receipts included in each BNY ADR Index are selected by BNY
from the universe of companies represented by the BNY ADR Composite Index. Dow
Jones acts as "index calculation agent" in connection with the calculation and
dissemination of each BNY ADR Index.

The Bank of New York does not sponsor, endorse, sell or promote the Shares.
Additionally, Dow Jones does not sponsor or promote the Shares.

Neither The Bank of New York, Dow Jones and Company, Inc. nor the Sponsor
make any representation or warranty, express or implied, to the Beneficial
Owners of Shares of a Fund or any member of the public regarding the ability of
a Fund to track the performance of its benchmark. Additionally, The Bank of New
York does not make any representation or warranty, express or implied, to the
owners of the Shares or any member of the public regarding the advisability of
investing in securities generally or in the Shares particularly.

The Bank of New York's only relationship to the index calculation agent is
the licensing of certain trademarks and trade names of BNY and of the BNY ADR
Composite Index which is determined, composed and calculated by BNY without
regard to the agent or any Fund. The Bank of New York has no obligation to take
the needs of the index calculation agent, a Fund or the owners of Shares of the
Funds into consideration in determining, composing or calculating the BNY ADR
Composite Index.

CAPITAL STOCK AND SHAREHOLDER REPORTS

The BLDRS Index Funds Trust is currently comprised of four (4) Funds. Each
Fund is created by an Indenture to the Trust Agreement, which while
incorporating all or substantially all of the terms of the Trust Agreement,
supplements the Trust Agreement with specific information regarding each Fund.
Each Fund issues Shares of beneficial interest, par value $.001 per Share. The
Sponsor may designate additional Funds.

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

Each Share 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. Shares of all Funds vote together as a single class
except that if the matter being voted on affects only a particular Fund it will
be voted on only by that Fund and if a matter affects a particular Fund
differently from other Funds, that Fund will vote separately on such matter.
Under New York law, a Fund is not required to hold an annual meeting of
shareholders unless required to
77

do so under the 1940 Act. The policy of a Fund is not to hold an annual meeting
of shareholders unless required to do so under the 1940 Act.

Shareholder inquiries may be made by writing to a Fund, c/o the
Distributor, ALPS Distributors, Inc., at 1625 Broadway, Suite 2200, Denver, CO
80202.

The Trustee will make, or cause to be made, such annual or other reports
and file such documents as it is advised by counsel or independent auditors
employed by it as are required for each Fund by the 1933 Act, the Exchange Act
and the 1940 Act make such elections and file such tax returns as it is advised
by counsel or independent auditors employed by it as are from time to time
required under any applicable state or federal statute or rule or regulation
there under, in particular, for the continuing qualification of each Fund as a
regulated investment company. Each Fund's fiscal year ends on September 30 and
may be changed from time to time by the Trustee and the Sponsor without consent
of the Beneficial Owners.

RESTRICTIONS ON PURCHASES BY INVESTMENT COMPANIES

The acquisition of Shares by registered investment companies is subject to
the restrictions set forth in section 12(d)(1) of the 1940 Act.

CONTINUOUS OFFERING OF SHARES

Creation Units are offered continuously to the public by each Fund through
the Distributor and are delivered upon the deposit of a Portfolio Deposit.
Persons making Portfolio Deposits and creating Creation Units will receive no
fees, commissions or other form of compensation or inducement of any kind from
the Sponsor or the Distributor, and no such person will have any obligation or
responsibility to the Sponsor or Distributor to effect any sale or resale of
Shares.

Because new Shares can be created and issued on an ongoing basis, at any
point during the life of a Fund, a "distribution", as such term is used in the
1933 Act, may be occurring. Broker-dealers and other persons are cautioned that
some of their activities may 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 and liability provisions of the 1933
Act. For example, a broker-dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Units after placing a creation order with the
Distributor, breaks them down into the constituent Shares and sells the Shares
directly to its customers; or if it chooses to couple the creation of a supply
of new Shares with an active selling effort involving solicitation of secondary
market demand for Shares. A determination of whether one is an underwriter 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 categorization as an underwriter.

Dealers who are not "underwriters" but are participating in a distribution
(as contrasted to ordinary secondary trading transactions), and thus dealing
with Shares

that are part of an "unsold allotment" within the meaning of Section 4(3)(C) of
the 1933 Act, would be unable to take advantage of the prospectus-delivery
exemption provided by Section 4(3) of the 1933 Act.

The Sponsor intends to qualify the Shares in states selected by the Sponsor
and through broker-dealers who are members of the NASD. Investors intending to
create or redeem Creation Units in transactions not involving a broker-dealer
registered in such investor's state of domicile or residence should consult
their legal advisor regarding applicable broker-dealer or securities regulatory
requirements under the state securities laws prior to such creation or
redemption.

PERFORMANCE AND OTHER INFORMATION

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

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.

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).

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. 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 is
not expressed in terms of an average rate of return.

The yield of a Fund is the net annualized yield based on a specified 30-day
(or one month) period assuming a semiannual compounding of income. Included in
net investment income is the amortization of market premium or accretion of
market and original issue discount on bonds. Yield is calculated by dividing the
net investment income per share earned during the period by the maximum offering
price per share on the last day of the period, according to the following
formula: YIELD = (a-b) divided by 2[(cd + 1)(6)-1] (where a = dividends and
interest earned during the period, b = expenses accrued for the period (net of
reimbursements), c = the average daily number of Shares outstanding during the
period that were entitled to receive dividends, and d = the maximum offering
price per share on the last day of the period).
79

Quotations of cumulative total return, average annual total return or yield
reflect only the performance of a hypothetical investment in a BNY ADR 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 which may be expected in the future.

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

In addition, a Fund will mistrack its relevant benchmark BNY ADR Index
because the total return calculated for its relevant benchmark BNY ADR Index
includes a calculation of dividend income gross of withholding taxes while the
total return calculation for a Fund will include some dividend income that will
be net of withholding taxes.

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

From time to time, in advertising and marketing literature, the Funds'
performance may be compared to the performance of broad groups of open-end and
closed-end investment companies as well as other exchange traded funds 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,
the Funds 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.

Information may be provided to investors regarding capital gains
distributions by one or more Funds. Comparisons between the Funds and other
investment vehicles such as conventional mutual funds may be made regarding such
capital gains distributions, as well as relative tax efficiencies between the
Funds and such other investment vehicles (e.g., realization of capital gains or
losses to a Fund and to such other investment vehicles in connection with
redemption of their respective securities).

Investors may be informed that, while no unequivocal statement can be made
as to the net tax impact on a mutual fund resulting from the purchases and sales
of its portfolio stocks over a period of time, conventional mutual funds that
have accumulated substantial unrealized capital gains, if they experience net
redemptions and do not have sufficient available cash, may be required to sell
appreciated securities and make taxable capital gains distributions that are
generated by changes in such fund's portfolio. In contrast to conventional
mutual funds where
80

redemption transactions that affect an adverse tax impact on taxable
shareholders because of the need to sell Fund Securities which, in turn, may
generate taxable gain, the in-kind redemption mechanism of the Funds generally
will not lead to a tax event for ongoing shareholders. Since shareholders are
generally required to pay tax on capital gains distributions, the smaller the
amount of such distributions, the less taxes that are payable currently. To the
extent that a Fund is not required to recognize capital gains, a shareholder of
such Fund is able, in effect, to defer tax on such gains until he sells or
otherwise disposes of his Shares. If such holder retains his Shares until his
death, under current law the tax basis of such Shares would be adjusted to their
then fair market value.

In addition, in connection with the communication of the performance of the
Funds to current or prospective shareholders, a Fund also may compare those
figures to the performance of certain unmanaged indexes which may assume the
reinvestment of dividends or interest but generally do not reflect deductions
for administrative and management costs. Examples of such indexes include, but
are not limited to the following: BNY Asia 50 ADR Index; BNY Developed Markets
100 ADR Index; BNY Emerging Markets 50 ADR Index; BNY Europe 100 ADR Index; Dow
Jones Industrial Average; Consumer Price Index; Standard & Poor's 500 Composite
Stock Price Index(R) (S&P 500); Russell 1000 & Nasdaq Non-Financial 100 and
their subsidiary sector indexes; MSCI AC Asia Pacific Free Index; MSCI Emerging
Markets Free Index; MSCI EAFE Index; and MSCI AC Europe Index.

Performance of an index is historical and does not represent performance of
a Fund, and is not a guarantee of future results.

In addition, information may be presented to current or prospective
shareholders regarding the purchase of Funds in the secondary market, such as
margin requirements, types of orders that may be entered and information
concerning short sales.

Evaluation of each Fund's performance or other relevant statistical
information made by independent sources may also be used in advertisements and
sales literature concerning a Fund, including reprints of, or selections from,
editorials or articles about a Fund. Sources for a Fund's performance
information and articles about a Fund include, but are not limited to, the
following: American Association of Individual Investors' Journal, a monthly
publication of the AAII that includes articles on investment analysis
techniques; Barron's, a Dow Jones and Company, Inc. business and financial
weekly that periodically reviews investment company performance data; Business
Week, a national business weekly that periodically reports the performance
rankings of investment companies; CDA Investment Technologies, an organization
that provides performance and ranking information through examining the dollar
results of hypothetical mutual fund investments and comparing these results
against appropriate indexes; Forbes, a national business publication that from
time to time reports the performance of specific investment companies; Fortune,
a national business publication that periodically rates the performance of a
variety of investment companies; The Frank Russell Company, a

West-Coast investment management firm that periodically evaluates international
stock markets and compares foreign equity market performance to U.S. stock
market performance; Ibbotson Associates, Inc., a company specializing in
investment research and data; Investment Company Data, Inc., an independent
organization that provides performance ranking information for broad classes of
mutual funds; Investor's Business Daily, a daily newspaper that features
financial, economic, and business news; Kiplinger's Personal Finance Magazine, a
monthly investment advisory publication that periodically features the
performance of a variety of securities; Lipper Analytical Services, Inc.'s
Mutual Fund Performance Analysis, a weekly publication of industry-wide mutual
fund averages by type of fund; Money, a monthly magazine that from time to time
features both specific funds and the mutual fund industry as a whole; The New
York Times, a nationally distributed newspaper that regularly covers financial
news; Smart Money, a national personal finance magazine published monthly by Dow
Jones & Company, Inc. and The Hearst Corporation that focuses on ideas for
investing, spending and saving; Value Line Mutual Fund Survey, an independent
publication that provides biweekly performance and other information on mutual
funds; The Wall Street Journal, a Dow Jones & Company, Inc. newspaper that
regularly covers financial news; Wiesenberger Investment Companies Services, an
annual compendium of information about mutual funds and other investment
companies, including comparative data on funds' backgrounds, management
policies, salient features, management results, income and dividend records and
price ranges; and Worth, a national publication distributed ten times per year
by Capital Publishing Company that focuses on personal finance.

CODE OF ETHICS

Each Fund and the Sponsor has adopted a code of ethics under rule 17j-1 of
the 1940 Act regarding personal securities transactions by employees. Subject to
certain conditions and standards, the codes permit employees to invest in Index
Securities for their own accounts. The codes are designed to prevent fraud,
deception and misconduct against each Fund and to provide reasonable standards
of conduct. These codes can be reviewed and copied at the SEC's Public Reference
Room in Washington, D.C.; information on the operation of the Public Reference
Room may be obtained by calling the SEC at 1-202-942-8090. These codes of ethics
are available on the EDGAR Database on the SEC's internet site at
http://www.sec.gov, and copies may be obtained, after paying a duplicating fee,
by electronic request at the following e-mail address: publicinfo@sec.gov, or by
writing the SEC's Public Reference Section, Washington, D.C. 20549-0102.

LEGAL OPINION

Carter, Ledyard & Milburn, Two Wall Street, New York, New York 10005, is
counsel to the Funds. Shearman & Sterling, 599 Lexington Avenue, New York, New
York 10022, has reviewed certain legal matters relating to the Funds on behalf
of the Sponsor.

INDEPENDENT AUDITORS

The financial statements as of November 8, 2002 included in this Prospectus
have been so included in reliance upon the report of Ernst & Young LLP,
independent auditors, given on the authority of said firm as the experts in
auditing and accounting.

ADDITIONAL INFORMATION

The Registration Statement, including this prospectus and the exhibits may
be reviewed and copied at the SEC's Public Reference Room (450 Fifth Street,
N.W., Washington, D.C. 20549) or on the EDGAR Database on the SEC's website
(http://www.sec.gov). The exhibits include documents such as the Trust Agreement
and Indenture, License Agreement, Distribution Agreement and Participant
Agreement. Information on the operation of the public reference room may be
obtained by calling the SEC at 1-202-942-8090. You may get copies of this and
other information after paying a duplicating fee, by electronic request at the
following e-mail address: publicinfo@sec.gov, or by writing the Public Reference
Section of the SEC, Washington, D.C. 20549-0102.

Shareholder inquiries may be directed to the Funds in writing c/o ALPS
Distributors, Inc. at 1625 Broadway, Suite 2200, Denver, CO 80202.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFER OF A FUND'S SHARES, AND, IF GIVEN OR MADE, THE INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE BLDRS
INDEX FUNDS TRUST OR ANY FUND. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE OF SHARES WILL UNDER ANY CIRCUMSTANCE IMPLY THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE AFTER THE DATE OF THIS PROSPECTUS.

GLOSSARY OF DEFINED TERMS

<Table>
<Caption>
PAGE
----

"1933 Act"................. 37
"1940 Act"................. 4
"Accumulation Period"...... 25
"Adjustment Day"........... 32
"ADR"...................... 3
"ADR Index
Administrator"........... 49
"ADR Index Committee"...... 50
"AMEX"..................... iv
"Authorized
Participants"............ 24
"Balancing Amount"......... 33
"Beneficial Owner"......... ii
"BLDRS".................... Cover Page
"BLDRS Index Fund"......... Cover Page
"BLDRS Index Fund Trust"... Cover Page
"BNY ADR Composite
Index"................... 1
"BNY ADR Index"............ Cover Page
"Business Day"............. iii
"Cash Redemption Amount"... 25
"Cash Component"........... 25
"Clearing Process"......... 24
"Code"..................... 5
"Creation Unit"............ Cover Page
"Deposit Securities"....... 25
"Depository"............... ii
"Depositary Receipts"...... 3
"Discretionary Termination
Amount".................. 41
"Distributor".............. ii
"Dividend Equivalent
Payment"................. 33
"Dividend Payment Dates"... ii
"DTC"...................... ii
"DTC Participant".......... 24
"EDR"...................... 3
"EMU"...................... 7
"ERISA".................... 45
"Exchange Act"............. 38
"Fiscal Year".............. ii
</Table>

<Table>
<Caption>
PAGE
----

"Fund Securities".......... 3
"Funds".................... Cover Page
"GAAP"..................... 52
"GDR"...................... 3
"Global Security".......... 38
"Index Security"........... iii
"Indirect Participants".... 38
"Initial Date of
Deposit"................. iv
"Licensor"................. ii
"Misweighting Amount"...... 30
"Misweighting"............. 30
"NASD"..................... iv
"NASDAQ"................... Cover Page
"NAV"...................... ii
"NAV Amount"............... 32
"NSCC"..................... iv
"NYSE"..................... 27
"Participant Agreement".... 24
"Participating Party"...... 24
"PFIC"..................... 44
"Portfolio Deposit"........ 25
"Portfolio Deposit
Amount".................. 33
"Quarterly Review"......... 50
"Record Dates"............. ii
"Redemption Payment"....... 25
"Redemption Securities".... 25
"Request Day".............. 32
"SEC"...................... 27
"Shares"................... Cover Page
"Sponsor".................. Cover Page
"Transaction Fee".......... 27
"Trust".................... Cover Page
"Trust Agreement and
Indenture"............... ii
"Trustee".................. ii
"Valuation Time"........... ii
"Weighting Analysis"....... 30
</Table>

BLDRS INDEX FUNDS TRUST
BLDRS ASIA 50 ADR INDEX FUND
BLDRS DEVELOPED MARKETS 100 ADR INDEX FUND
BLDRS EMERGING MARKETS 50 ADR INDEX FUND
BLDRS EUROPE 100 ADR INDEX FUND

SPONSOR:
NASDAQ FINANCIAL PRODUCTS SERVICES, INC.

- --------------------------------------------------------------------------------

This Prospectus does not include all of the information with respect to the
BLDRS Index Funds Trust set forth in its Registration Statement filed with the
SEC in Washington, D.C. under the:

Securities Act of 1933 (File No. 333-84788) and
Investment Company Act of 1940 (File No. 811-21057)

TO OBTAIN COPIES FROM THE SEC AT PRESCRIBED RATES
WRITE: Public Reference Section of the SEC
450 Fifth Street, N.W., Washington, D.C. 20549-6009
CALL: 1-800-SEC-0330
VISIT: http://www.sec.gov

- --------------------------------------------------------------------------------

No person is authorized to give any information or make any representation about
the BLDRS Index Funds Trust not contained in this Prospectus, and you should not
rely on any other information. Read and keep this Prospectus for future
reference.

- --------------------------------------------------------------------------------

Nasdaq Financial Products Services, Inc. has filed a registration statement on
Form S-6 and Form N-8B-2 with the SEC covering the Shares and the BLDRS Index
Funds Trust. While this prospectus is a part of the registration statement on
Form S-6, it does not contain all the exhibits filed as part of the registration
statement on Form S-6. You should consider reviewing the full text of those
exhibits.

- --------------------------------------------------------------------------------

PROSPECTUS DATED NOVEMBER 8, 2002

CONTENTS OF REGISTRATION STATEMENT

This Amended Registration Statement on Form S-6 comprises the following papers
and documents:

The facing sheet.

The cross-reference sheet.

The prospectus.

The undertaking to file reports.

The signatures.

The following Exhibits are filed herewith:

1. Ex. 99.A1 - Standard Terms & Conditions of Trust, dated and
effective as of November 8, 2002, between Nasdaq Financial Products
Services, Inc., as Sponsor, and The Bank of New York, as Trustee.

2. Ex. 99.A2 - Trust Indenture and Agreement between Nasdaq Financial
Products Services, Inc., as Sponsor, and The Bank of New York, as
Trustee, incorporating by reference the Standard Terms and
Conditions of Trust referenced above.

3. Ex. 99.A5 - Form of each Index Fund's security (included as exhibit
B to Exhibit 1 listed above and incorporated herein by reference)

4. Ex. 99.A6 - Certificate of Incorporation, as amended, of Nasdaq
Financial Products Services, Inc.

5. Ex. 99.A6 - By-Laws of Nasdaq Financial Products Services, Inc.

6. Ex. 99.A4 - License Agreement between Nasdaq Financial Products
Services, Inc. as Licensee and The Bank of New York, as Licensor.

7. Ex. 99.A3B - Participant Agreement to be entered into among the
Trustee, the Distributor and various Broker Dealers (included as an
exhibit to Exhibit 1 listed above and incorporated herein by
reference).

8. Ex. 99.A8 - Depository Agreement among the Trustee, the Sponsor and
the Depository with respect to services rendered to the Trust.

9. Ex. 99.A4 - Distribution Agreement by and among the Sponsor, the
Trust and the Distributor.

10. Ex. 99.2 - Opinion of Counsel as to legality of securities being
registered and consent of Counsel.

11. Ex. 99.C4 - Opinion of Counsel as to certain tax aspects of the
Trust.

12. Ex. 99.C1 - Consent of Independent Auditors.

13. Ex. 99.A11 - Code of Ethics of the Trust and each Index Fund adopted
under Rule 17j-1 under the Investment Company Act of 1940.

14. Ex. 99.3 - Financial Statements of the Sponsor, Nasdaq Financial
Products Services, Inc.

15. Ex. 99.A5 - Power of Attorney (incorporated by reference to Exhibit
1 to the Registration Statement on Form S-6 in File Number
333-84788, filed on March 22, 2002).

FINANCIAL STATEMENTS

1. Statement of Financial Condition of the Trust as shown in the
current Prospectus for this series herewith.

2. Financial Statements of the Sponsor, Nasdaq Financial Products
Services, Inc. filed herewith as Exhibit 99.3.

C-3

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant, BLDRS Index Funds Trust has duly caused this Pre-Effective Amendment
No. 2 to the Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of New York, and the State of New York, on the 8th day
of November, 2002.

BLDRS Index Funds Trust
-----------------------
(Registrant)

By: Nasdaq Financial Products Services, Inc.
----------------------------------------
(Sponsor)

By: /s/ John L. Jacobs
-------------------------
Name: John L. Jacobs
Title: Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to the Registration Statement has been signed on
behalf of Nasdaq Financial Products Services, Inc., the Sponsor, by the
following persons who constitute a majority of its Board of Directors and by the
named persons who are in the following capacities, in the City of New York, and
the State of New York, on the date indicated.

Nasdaq Financial Products Services Inc.

By: David P. Warren*
-------------------------
Name: David P. Warren
Title: Director, Chairman

By: John L. Jacobs
-------------------------
Name: John L. Jacobs
Title: Director, Chief Executive Officer

By: Denise B. Stires*
-------------------------
Name: Denise B. Stires
Title: Director, President

By: Darienne J. Donovan*
-------------------------
Name: Darienne J. Donovan
Title: Treasurer

- -------------
* By his signature below, John L. Jacobs, pursuant to a duly executed Power of
Attorney filed with the Securities and Exchange Commission in connection with
the Registration Statement on March 22, 2002, has signed this Pre-Effective
Amendment No. 2 to the Registration Statement on behalf of the persons whose
signatures are printed above, in the capacities set forth below their
respective names.

By: /s/ John L. Jacobs
--------------------------------
Name: John L. Jacobs
Title: Attorney-in-fact

C-4

EXHIBIT INDEX

EXHIBIT NO. TITLE OF DOCUMENT
- ----------- -----------------

Certain of the following exhibits, as indicated parenthetically, were
previously filed as exhibits to other reports or registration statements filed
by Nasdaq Financial Products Services, Inc. under the Securities Act of 1933 or
the Exchange Act of 1934, respectively, and are incorporated herein by
reference to such reports.