Exhibit (e.2)
iShares Trust
FORM OF
AUTHORIZED PARTICIPANT AGREEMENT
This Authorized Participant Agreement (the "Agreement") is entered into by
and between SEI Investments Distribution Company (together with its affiliates,
the "Distributor") and __________________________________ (the "Participant")
and is subject to acceptance by Investors Bank & Trust ("IBT" or the "Transfer
Agent"). The Transfer Agent serves as the transfer agent for the iShares Trust
(the "Fund") and is an Index Receipt Agent as that term is defined in the rules
of the National Securities Clearing Corporation ("NSCC"). The Distributor, the
Transfer Agent and the Participant acknowledge and agree that the Fund shall be
a third party beneficiary of this Agreement, and shall receive the benefits
contemplated by this Agreement, to the extent specified herein. The Distributor
has been retained to provide services as principal underwriter of the Fund
acting on an agency basis in connection with the sale and distribution of shares
of beneficial interest, par value $.001 per share (sometimes referred to as
"iSharesSM"), of the iShares Index Series of the Fund (each, an "Index Series")
named on Annex I hereto. As specified in the Fund's Prospectus and Statement of
Additional Information incorporated therein (the "Prospectus") included as part
of its registration statement, as amended, on Form N-1A (No. 811-09729), the
iShares of any Index Series offered thereby may be purchased or redeemed only in
aggregations of a specified number of iShares referred to therein and herein as
a "Creation Unit". The number of iShares presently constituting a Creation Unit
of each Index Series is set forth in Annex I. Creation Units of iShares may be
purchased only by or through a Participant that has entered into an Authorized
Participant Agreement with the Fund and the Distributor.
The Prospectus provides that Creation Units generally will be sold in
exchange for an in-kind deposit of a designated portfolio of equity securities
(the "Deposit Securities") and an amount of cash computed as described in the
Prospectus (the "Cash Component"), plus a purchase transaction fee as described
in the Prospectus, delivered to the Fund by the Participant for its own account
or acting on behalf of another party. Together, the Deposit Securities and the
Cash Component constitute the "Portfolio Deposit", which represents the minimum
initial and subsequent investment amount for iShares of any Index Series of the
Fund. References to the Prospectus are to the then current Prospectus as it may
be supplemented or amended from time to time. Capitalized terms not otherwise
defined herein are used herein as defined in the Prospectus.
This Agreement is intended to set forth certain premises and the
procedures by which the Participant may purchase and/or redeem Creation Units of
iShares (i) through the Continuous Net Settlement ("CNS") clearing processes of
NSCC as such processes have been enhanced to effect purchases and redemptions of
Creation Units, such processes being referred to herein as the "iShares Clearing
Process", or (ii) outside the iShares Clearing Process (i.e., through the
facilities of The Depository Trust Company ("DTC")). The procedures for
processing an order to purchase iShares (each a "Purchase Order") and an order
to redeem iShares (each a "Redemption Order") are described in the Fund's
Prospectus and in Annex II to this Agreement. All Purchase and Redemption
Orders must be made pursuant to the procedures set forth in Annex II. A
Participant may not place a Purchase Order before the fifth Business
Day (as defined below) following execution and delivery to the Distributor of
this Agreement and notification by the Distributor of the Participant's status.
A Participant may not cancel a Purchase Order or a Redemption Order after an
order is placed by the Participant.
The parties hereto in consideration of the premises and of the mutual
agreements contained herein agree as follows:
1. STATUS OF PARTICIPANT. The Participant hereby represents, covenants and
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warrants that with respect to Purchase Orders or Redemption Orders of
Creation Units of iShares of any Index Series(i) through the iShares
Clearing Process, it is a member of NSCC and a participant in the CNS
System of NSCC (as defined in the Fund's Prospectus, a "Participating
Party"), and/or (ii) outside the iShares Clearing Process, it is a DTC
Participant (as defined in the Fund's Prospectus, a "DTC Participant"). The
Participant may place Purchase Orders or Redemption Orders for Creation
Units either through the iShares Clearing Process or outside the iShares
Clearing Process, subject to the procedures for purchase and redemption
referred to in paragraph 2 and Annex II of this Agreement ("Execution of
Orders"). Any change in the foregoing status of the Participant shall
terminate this Agreement and the Participant shall give prompt written
notice to the Distributor and the Fund of such change.
The Participant hereby represents and warrants that, unless the following
paragraph is applicable to it, it is registered as a broker-dealer under
the Securities Exchange Act of 1934, as amended, is qualified to act as a
broker or dealer in the states or other jurisdictions where it transacts
business, and is a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD"), and the Participant agrees that it
will maintain such registrations, qualifications, and membership in good
standing and in full force and effect throughout the term of this
Agreement. The Participant agrees to comply with all applicable Federal
laws, the laws of the states or other jurisdictions concerned, and the
rules and regulations promulgated thereunder and with the Constitution,
By-Laws and Conduct Rules of the NASD, and that it will not offer or sell
iShares of any Index Series of the Fund in any state or jurisdiction
where they may not lawfully be offered and/or sold.
If the Participant is offering and selling iShares of any Index Series of
the Fund in jurisdictions outside the several states, territories and
possessions of the United States and is not otherwise required to be
registered, qualified, or a member of the NASD as set forth above, the
Participant nevertheless agrees to observe the applicable laws of the
jurisdiction in which such offer and/or sale is made, to comply with the
full disclosure requirements of the Securities Act of 1933, as amended (the
"1933 Act") and the regulations promulgated thereunder and to conduct its
business in accordance with the spirit of the NASD Conduct Rules.
The Participant understands and acknowledges that the proposed method by
which Creation Units of iShares will be created and traded may raise
certain issues under applicable securities laws. For example, because new
Creation Units of iShares may be issued and sold by the Fund on an ongoing
basis, at any point a "distribution", as such term is used in the 1933 Act,
may occur. The Participant understands and acknowledges that some
activities on its part, depending on the circumstances, may result in its
being deemed a participant in a distribution in a manner which could render
it a statutory underwriter and subject it to the prospectus delivery and
liability provisions of the 1933 Act. The Participant also
understands and acknowledges that dealers who are not "underwriters" but
are effecting transactions in iShares, whether or not participating in the
distribution of iShares, are generally required to deliver a prospectus.
2. EXECUTION OF PURCHASE ORDERS AND REDEMPTION ORDERS. All Purchase Orders or
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Redemption Orders shall be made in accordance with the terms of the
Prospectus and the procedures described in Annex II to this Agreement. Each
party hereto agrees to comply with the provisions of such documents to the
extent applicable to it. It is contemplated that the phone lines used by
the iShares telephone representatives will be recorded, and the Participant
hereby consents to the recording of all calls with the iShares telephone
representatives. The Fund reserves the right to issue additional or other
procedures relating to the manner of purchasing or redeeming Creation Units
and the Participant agrees to comply with such procedures as may be issued
from time to time, including but not limited to the iShares Cash Collateral
Settlement Procedures that are referenced in Annex II to this Agreement.
The Participant acknowledges and agrees on behalf of itself and any party
for which it is acting (whether as a customer or otherwise) that delivery
of a Purchase Order or Redemption Order shall be irrevocable, provided that
the Fund and the Distributor on behalf of the Fund reserves the right to
reject any Purchase Order until the trade is released as "good" as
described in Annex II and any Redemption Order that is not in "proper form"
as defined in the Prospectus.
With respect to any Redemption Order, the Participant also acknowledges and
agrees on behalf of itself and any party for which it is acting (whether as
a customer or otherwise) to return to the Fund any dividend, distribution
or other corporate action paid to it or to the party for which it is acting
in respect of any Deposit Security that is transferred to the Participant
or any party for which it is acting that, based on the valuation of such
Deposit Security at the time of transfer, should have been paid to the
Index Series. With respect to any Redemption Order, the Participant also
acknowledges and agrees on behalf of itself and any party for which it is
acting (whether as a customer or otherwise) that the Fund is entitled to
reduce the amount of money or other proceeds due to the Participant or any
party for which it is acting by an amount equal to any dividend,
distribution or other corporate action to be paid to it or to the party for
which it is acting in respect of any Deposit Security that is transferred
to the Participant or any party for which it is acting that, based on the
valuation of such Deposit Security at the time of transfer, should be paid
to the Index Series. With respect to any Purchase Order, the Fund
acknowledges and agrees to return to the Participant or any party for which
it is acting any dividend, distribution or other corporate action paid to
the Fund in respect of any Deposit Security that is transferred to the Fund
that, based on the valuation of such Deposit Security at the time of
transfer, should have been paid to the Participant or any party for which
it is acting.
3. NSCC. Solely with respect to Purchase Orders or Redemption Orders through
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the iShares Clearing Process, the Participant, as a Participating Party,
hereby authorizes the Transfer Agent to transmit to the NSCC on behalf of
the Participant such instructions, including amounts of the Deposit
Securities and Cash Components as are necessary, consistent with the
instructions issued by the Participant to the iShares telephone
representative. The Participant agrees to be bound by the terms of such
instructions issued by the Transfer Agent and reported to NSCC as though
such instructions were issued by the Participant directly to NSCC.
4. MARKETING MATERIALS AND REPRESENTATIONS. The Participant represents,
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warrants and agrees that it will not make any representations concerning
iShares other than those contained in the Fund's then current Prospectus or
in any promotional materials or sales literature furnished to the
Participant by the Distributor. The Participant agrees not to furnish or
cause to be furnished to any person or display or publish any information
or materials relating to iShares (including, without limitation,
promotional materials and sales literature, advertisements, press releases,
announcements, statements, posters, signs or other similar materials),
except such information and materials as may be furnished to the
Participant by the Distributor and such other information and materials as
may be approved in writing by the Distributor. The Participant understands
that the Fund will not be advertised or marketed as an open-end investment
company, i.e., as a mutual fund, which offers redeemable securities, and
that any advertising materials will prominently disclose that the iShares
are not redeemable units of beneficial interest in the Fund. In addition,
the Participant understands that any advertising material that addresses
redemptions of iShares, including the Fund's Prospectus, will disclose that
the owners of iShares may acquire iShares and tender iShares for redemption
to the Fund in Creation Unit aggregations only. Notwithstanding the
foregoing, the Participant may without the written approval of the
Distributor prepare and circulate in the regular course of its business
research reports that include information, opinions or recommendations
relating to iShares (i) for public dissemination, provided that such
research reports compare the relative merits and benefits of iShares with
other products and are not used for purposes of marketing iShares and (ii)
for internal use by the Participant.
5. SUBCUSTODIAN ACCOUNT. The Participant understands and agrees that in the
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case of each International Index Series, the Fund has caused the Fund's
custodian Investors Bank & Trust Co. ("Custodian") to maintain with the
applicable subcustodian for such Index Series an account in the relevant
foreign jurisdiction to which the Participant shall deliver or cause to be
delivered in connection with the purchase of a Creation Unit the securities
and any other cash amounts (or the cash value of all or a part of such
securities, in the case of a permitted or required cash purchase or "cash
in lieu" amount) on behalf of itself or any party for which it is acting
(whether or not a customer), with any appropriate adjustments as advised by
the Fund, in accordance with the terms and conditions applicable to such
account in such jurisdiction.
6. TITLE TO SECURITIES; RESTRICTED SHARES. The Participant represents on
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behalf of itself and any party for which it acts that upon delivery of a
portfolio of Deposit Securities to the Custodian and/or the relevant
subcustodian in accordance with the terms of the Prospectus, the Fund will
acquire good and unencumbered title to such securities, free and clear of
all liens, restrictions, charges and encumbrances and not subject to any
adverse claims, including, without limitation, any restriction upon the
sale or transfer of such securities imposed by (i) any agreement or
arrangement entered into by the Participant or any party for which it is
acting in connection with a Purchase Order or (ii) any provision of the
1933 Act, and any regulations thereunder (except that portfolio securities
of issuers other than U.S. issuers shall not be required to have been
registered under the 1933 Act if exempt from such registration), or of the
applicable laws or regulations of any other applicable jurisdiction and
(iii) no such securities are "restricted securities" as such term is used
in Rule 144(a)(3)(i) promulgated under the 1933 Act.
7. CASH COMPONENT AND FEES.
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(a) For Domestic Funds. The Participant hereby agrees that as between the
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Fund and itself or any party for which it acts in connection with a
Purchase Order, it will make available in same day funds for each
purchase of iShares an amount of cash sufficient to pay the Cash
Component (as defined in the prospectus) and any other amounts of cash
due to the Fund in connection with the purchase of any Creation Unit
of iShares (including the purchase transaction fee for in-kind and
cash purchases and the additional variable charge for cash purchases
(when, in the sole discretion of the Fund, cash purchases are
available or specified)) (the "Cash Amount") which shall be made
through DTC to an account maintained by the Custodian at Investors
Bank and Trust Company, Boston, Massachusetts and shall be provided in
same day or immediately available funds on or before the settlement
date in accordance with the Fund's prospectus ("Contractual Settlement
Date"). The Participant hereby agrees to ensure that the Cash Amount
will be received by the Fund on or before the Contractual Settlement
Date, and in the event payment of such Cash Amount has not been made
by such Contractual Settlement Date, the Participant agrees on behalf
of itself or any party for which it acts in connection with a Purchase
Order to pay the full cash amount, plus interest, computed at such
reasonable rate as may be specified by the Fund from time to time. The
Participant may require its customer to enter into an agreement with
the Participant with respect to such matters. The Participant shall be
liable to the Custodian and/or the Fund for any amounts advanced by
the Custodian in its sole discretion to the Participant for payment of
the amounts due and owing for the Cash Component, the purchase
transaction fee, cash collateral discrepancies and/or the additional
variable charge for cash purchases (when, in the sole discretion of
the Fund, cash purchases are available or specified).
(b) For International Funds. The Participant hereby agrees that as between
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the Fund and itself or any party for which it acts in connection with
a Purchase Order, it will make available in same day funds for each
purchase of iShares an amount of cash sufficient to pay the Cash
Component (as defined in the prospectus) and any other amounts of cash
due to the Fund in connection with the purchase of any Creation Unit
of iShares (including the purchase transaction fee for in-kind and
cash purchases and the additional variable charge for cash purchases
(when, in the sole discretion of the Fund, cash purchases are
available or specified)) (the "Cash Amount") which shall be made via
Fed Funds Wire to an account maintained by the Custodian at Investors
Bank and Trust Company, Boston, Massachusetts and shall be provided in
same day or immediately available funds at least one business day
before contractual settlement date. The Participant hereby agrees to
ensure that the Cash Amount will be received by the Fund on or before
the Contractual Settlement Date, and in the event payment of such Cash
Amount has not been made by such Contractual Settlement Date, the
Participant agrees on behalf of itself or any party for which it acts
in connection with a Purchase Order to pay the full cash amount, plus
interest, computed at such reasonable rate as may be specified by the
Fund from time to time. The Participant may require its customer to
enter into an agreement with the Participant with respect to such
matters. The Participant shall be liable to the Custodian and/or the
Fund for any amounts advanced by the Custodian in its sole discretion
to the Participant for payment of the amounts due and owing for the
Cash Component, the purchase transaction fee, cash
collateral discrepancies and/or the additional variable charge for
cash purchases (when, in the sole discretion of the Fund, cash
purchases are available or specified).
8. ROLE OF PARTICIPANT.
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(a) The Participant acknowledges and agrees that for all purposes of this
Agreement, the Participant will be deemed to be an independent
contractor, and will have no authority to act as agent for the Fund or
the Distributor in any matter or in any respect. The Participant
agrees to make itself and its employees available, upon request,
during normal business hours to consult with the Fund or the
Distributor or their designees concerning the performance of the
Participant's responsibilities under this Agreement.
(b) In executing this Agreement, the Participant agrees in connection with
any purchase or redemption transactions in which it acts for a
customer or for any other DTC Participant or indirect participant, or
any other Beneficial Owner, that it shall extend to any such party all
of the rights, and shall be bound by all of the obligations, of a DTC
Participant in addition to any obligations that it undertakes
hereunder or in accordance with the Prospectus.
(c) The Participant agrees to maintain records of all sales of iShares
made by or through it and to furnish copies of such records to the
Fund or the Distributor upon the request of the Fund or the
Distributor.
9. AUTHORIZED PERSONS. Concurrently with the execution of this Agreement and
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from time to time thereafter as may be requested by the Fund or
Distributor, the Participant shall deliver to the Distributor and the Fund,
with copies to the Transfer Agent (referred to below) duly certified as
appropriate by its Secretary or other duly authorized official, a
certificate in a form approved by the Fund (see Annex III hereto) setting
forth the names and signatures of all persons authorized to give
instructions relating to any activity contemplated hereby or any other
notice, request or instruction on behalf of the Participant (each an
"Authorized Person"). Such certificate may be accepted and relied upon by
the Distributor and the Fund as conclusive evidence of the facts set forth
therein and shall be considered to be in full force and effect until
delivery to the Distributor and the Fund of a superseding certificate in a
form approved by the Fund bearing a subsequent date. Upon the termination
or revocation of authority of such Authorized Person by the Participant,
the Participant shall give immediate written notice of such fact to the
Distributor and the Fund and such notice shall be effective upon receipt by
both the Distributor and the Fund. The Distributor shall issue to each
Authorized Participant a unique personal identification number ("PIN
Number") by which such Authorized Participant shall be identified and
instructions issued by the Participant hereunder shall be authenticated.
The PIN Number shall be kept confidential and only provided to Authorized
Persons. If after issuance, a Participant's PIN Number is changed, the new
PIN Number will become effective on a date mutually agreed upon by the
Participant and the Distributor.
10. REDEMPTION. The Participant understands and agrees that Redemption Orders
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may be submitted only on days that the American Stock Exchange, Inc. (the
"AMEX") is open for trading or business.
(a) The Participant represents and warrants that it will not attempt to
place a Redemption Order for the purpose of redeeming any Creation
Unit of iShares of any Index Series unless it first ascertains that it
or its customer, as the case may be, owns outright or has full legal
authority and legal and beneficial right to tender for redemption the
requisite number of iShares of the relevant Index Series to be
redeemed and to the entire proceeds of the redemption and that such
iShares have not been loaned or pledged to another party and are not
the subject of a repurchase agreement, securities lending agreement or
any other arrangement that would preclude the delivery of such iShares
to the Transfer Agent in accordance with the Prospectus or as
otherwise required by the Fund. The Participant understands that
iShares of any Index Series may be redeemed only when one or more
Creation Units of iShares of a Beneficial Owner are held in the
account of a single Participant.
(b) In the case of a resident Australian or New Zealand holder,
notwithstanding the foregoing, the Participant understands and agrees
that such holder is only entitled to receive cash upon its redemption
of Creation Units of iShares. In the Redemption Order the Participant
will be required to confirm that an in-kind redemption request has not
been submitted on behalf of a beneficial owner who is an Australian
resident.
11. BENEFICIAL OWNERSHIP. The Participant represents and warrants to the
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Distributor and the Fund that (based upon the number of outstanding iShares
of such Index Series made publicly available by the Fund) it does not, and
will not in the future, hold for the account of any single Beneficial Owner
of iShares of the relevant Index Series 80 percent or more of the currently
outstanding iShares of such relevant Index Series, so as to cause the Fund
to have a basis in the portfolio securities deposited with the Fund with
respect to such Index Series different from the market value of such
portfolio securities on the date of such deposit, pursuant to section 351
of the Internal Revenue Code of 1986, as amended. The Participant agrees
that the confirmation relating to any order for one or more Creation Units
of iShares of an Index Series shall state as follows: "Purchaser represents
and warrants that, after giving effect to the purchase of iShares to which
this confirmation relates, it will not hold 80 percent or more of the
outstanding iShares of the relevant Index Series of the Fund and that it
will not treat such purchase as eligible for tax-free treatment under
Section 351 of the Internal Revenue Code of 1986, as amended. If purchaser
is a dealer, it agrees to deliver similar written confirmations to any
person purchasing any of the iShares to which this confirmation relates
from it." The Fund and its Transfer Agent and Distributor shall have the
right to require information from the Participant regarding iShares
ownership of each Index Series, and to rely thereon to the extent necessary
to make a determination regarding ownership of 80 percent or more of the
currently outstanding iShares of any Index Series by a Beneficial Owner as
a condition to the acceptance of a deposit of Deposit Securities.
12. INDEMNIFICATION. This paragraph shall survive the termination of this
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Agreement.
(a) The Participant hereby agrees to indemnify and hold harmless the
Distributor, the Fund, the Transfer Agent, their respective
subsidiaries, affiliates, directors, officers, employees and agents,
and each person, if any, who controls such persons within the meaning
of Section 15 of the 1933 Act (each an "Indemnified Party") from and
against any loss, liability, cost and expense (including attorneys'
fees) incurred by such Indemnified Party as a result of (i) any breach
by the Participant of any provision of this Agreement that relates to
the Participant; (ii) any failure on the part of the Participant to
perform any of its obligations set forth in the Agreement; (iii) any
failure
by the Participant to comply with applicable laws, including rules and
regulations of self-regulatory organizations; or (iv) actions of such
Indemnified Party in reliance upon any instructions issued in
accordance with Annex II, III or IV (as each may be amended from time
to time) reasonably believed by the Distributor and/or the Transfer
Agent to be genuine and to have been given by the Participant. The
Participant and the Distributor understand and agree that the Fund as
a third party beneficiary to this Agreement is entitled and intends to
proceed directly against the Participant in the event that the
Participant fails to honor any of its obligations pursuant to this
Agreement that benefit the Fund. The Distributor shall not be liable
to the Participant for any damages arising out of mistakes or errors
in data provided to the Distributor, or out of interruptions or delays
of communications with the Indemnified Parties who are service
providers to the Fund, nor is the Distributor liable for any action,
representation, or solicitation made by the wholesalers of the Fund.
(b) The Distributor hereby agrees to indemnify and hold harmless the
Participant, its respective subsidiaries, affiliates, directors,
officers, employees and agents, and each person, if any, who controls
such persons within the meaning of Section 15 of the 1933 Act (each an
"Indemnified Party") from and against any loss, liability, cost and
expense (including attorneys' fees) incurred by such Indemnified Party
as a result of (i) any breach by the Distributor of any provision of
this Agreement that relates to the Distributor; (ii) any failure on
the part of the Distributor to perform any of its obligations set
forth in this Agreement; (iii) any failure by the Distributor to
comply with applicable laws, including rules and regulations of self-
regulatory organizations; or (iv) actions of such Indemnified Party in
reliance upon any representations made in accordance with Annex II,
III and IV (as each may be amended from time to time) reasonably
believed by the Participant to be genuine and to have been given by
the Distributor. The Participant shall not be liable to the
Distributor for any damages arising out of mistakes or errors in data
provided to the Participant, or out of interruptions or delays of
communications with the Indemnified Parties who are service providers
to the Fund, nor is the Participant liable for any action,
representation, or solicitation made by the wholesalers of the Fund.
13. INFORMATION ABOUT PORTFOLIO DEPOSITS. The Participant understands that the
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number and names of the designated portfolio of Deposit Securities to be
included in the current Portfolio Deposit for each Index Series will be
made available by NSCC on each day that the AMEX is open for trading and
will also be made available on each such day through the facilities of the
National Securities Clearing Corporation.
14. ACKNOWLEDGMENT. The Participant acknowledges receipt of the Prospectus and
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represents it has reviewed such documents and understands the terms
thereof.
15. NOTICES. Except as otherwise specifically provided in this Agreement, all
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notices required or permitted to be given pursuant to this Agreement shall
be given in writing and delivered by personal delivery or by postage
prepaid registered or certified United States first class mail, return
receipt requested, or by telex, telegram or facsimile or similar means of
same day delivery (with a confirming copy by mail). Unless otherwise
notified in writing, all notices to the Fund shall be at the address or
telephone, facsimile or telex numbers as follows: Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Director, Investors Bank and Trust Company, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
All notices to the Participant, the Distributor and the Transfer Agent
shall be directed to the address or telephone, facsimile or telex numbers
indicated below the signature line of such party.
16. EFFECTIVENESS, TERMINATION AND AMENDMENT. This Agreement shall become
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effective five Business Days after execution and delivery to the
Distributor upon notice by the Distributor to the Authorized Participant. A
"Business Day" shall mean each day the American Stock Exchange, Inc. is
open for regular trading. This Agreement may be terminated at any time by
any party upon sixty days prior written notice to the other parties and may
be terminated earlier by the Fund or the Distributor at any time in the
event of a breach by the Participant of any provision of this Agreement or
the procedures described or incorporated herein. This Agreement supersedes
any prior such agreement between or among the parties. This Agreement may
be amended by the Fund or the Distributor from time to time without the
consent of any Beneficial Owner by the following procedure. The Fund or the
Distributor will mail a copy of the amendment to the Participant and the
Fund or Distributor, as applicable. For purposes of this Agreement, mail
will be deemed received by the recipient thereof on the fifth (5/rd/)
Business Day following the deposit of such mail into the U.S. Postal
system. If neither the Participant or the other party objects in writing to
the amendment within five days after its receipt, the amendment will become
part of this Agreement in accordance with its terms.
17. GOVERNING LAW. This Agreement shall be governed by and interpreted in
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accordance with the laws of the State of New York. The parties irrevocably
submit to the non-exclusive jurisdiction of any New York State or United
States Federal court sitting in New York City over any suit, action or
proceeding arising out of or relating to this Agreement.
18. COUNTERPARTS. This Agreement may be executed in several counterparts, each
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of which shall be an original and all of which shall constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year written below.
DATED: ____________
SEI INVESTMENTS DISTRIBUTION
COMPANY
BY:___________________________________
TITLE:________________________________
ADDRESS:______________________________
______________________________________
______________________________________
TELEPHONE:____________________________
FACSIMILE:____________________________
TELEX:________________________________
[NAME OF PARTICIPANT]
BY:___________________________________
TITLE:________________________________
ADDRESS:______________________________
______________________________________
______________________________________
TELEPHONE:____________________________
FACSIMILE:___________________________________
TELEX:_______________________________________
ACCEPTED BY:
________________________________, AS
TRANSFER AGENT
BY:__________________________________________
TITLE:_______________________________________
ADDRESS:_____________________________________
_____________________________________________
_____________________________________________
TELEPHONE:___________________________________
FACSIMILE:___________________________________
TELEX:_______________________________________
ANNEX I
iShares Trust
INDEX SERIES AND iSHARES PER CREATION UNIT
Index iShares per
Series Creation Unit
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iShares S&P 500 Fund 50,000
iShares S&P ▇▇▇/▇▇▇▇▇ ▇▇▇▇▇▇ Fund 50,000
iShares S&P 500/BARRA Value Fund 50,000
iShares S&P MidCap 400 Fund 50,000
iShares S&P MidCap 400/BARRA Growth Fund 50,000
iShares S&P MidCap 400/BARRA Value Fund 50,000
iShares S&P SmallCap 600 Fund 50,000
iShares S&P SmallCap 600 Fund/BARRA Growth Fund 50,000
iShares S&P SmallCap 600 Fund/BARRA Value Fund 50,000
iShares S&P Europe 350 Fund 50,000
iShares S&P/TSE 60 Fund 50,000
iShares Dow ▇▇▇▇▇ Total Market Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Basic Materials Sector Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Consumer Cyclicals Sectors Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Consumer Non-Cyclicals Sector Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Energy Sector Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Financial Sector Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Healthcare Sector Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Industrials Sector Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Technology Sector Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Telecommunications Sector Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Utilities Sector Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Chemicals Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Financial Services Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Internet Fund 50,000
iShares Dow ▇▇▇▇▇ U.S. Real Estate Fund 50,000
iShares ▇▇▇▇▇▇▇ 3000 Fund 50,000
iShares ▇▇▇▇▇▇▇ 3000 Growth Fund 50,000
iShares ▇▇▇▇▇▇▇ 3000 Value Fund 50,000
iShares ▇▇▇▇▇▇▇ 2000 Fund 50,000
iShares ▇▇▇▇▇▇▇ 2000 Growth Fund 50,000
iShares ▇▇▇▇▇▇▇ 2000 Value Fund 50,000
iShares ▇▇▇▇▇▇▇ 1000 Fund 50,000
iShares ▇▇▇▇▇▇▇ 1000 Growth Fund 50,000
iShares ▇▇▇▇▇▇▇ 1000 Value Fund 50,000
ANNEX II
iShares Trust
PROCEDURES FOR PROCESSING
PURCHASE ORDERS AND REDEMPTION ORDERS
This Annex II to the Authorized Participant Agreement supplements the
Prospectus with respect to the procedures to be used in processing a Purchase
Order for the purchase of iShares in Creation Units of each Index Series and a
Redemption Order for the redemption of iShares in Creation Units of each Index
Series. Capitalized terms, unless otherwise defined in this Annex II, have the
meanings attributed to them in the Authorized Participant Agreement or the
Prospectus.
A Participant is required to have signed the Authorized Participant
Agreement. Upon acceptance of the Agreement and execution thereof by the Fund
and in connection with the initial Purchase Order submitted by the Participant,
the Distributor will assign a PIN Number to each Authorized Person authorized to
act for a Participant. This will allow a Participant through its Authorized
Person(s) to place a Purchase Order or Redemption Order with respect to the
purchase or redemption of Creation Units of iShares.
ANNEX II -- PART A
TO PLACE AN ORDER FOR PURCHASE OF
CREATION UNIT(S) OF iShares
1. PLACING A PURCHASE ORDER. Purchase Orders for Creation Units iShares may be
------------------------
initiated only on days that the American Stock Exchange is open for trading.
To begin a Purchase Order, Authorized Participant ("Participant") must
telephone Distributor at (▇▇▇) ▇▇▇-▇▇▇▇. This telephone call must be made by
an Authorized Person of Participant not later than the closing time of the
regular trading session on the American Stock Exchange which is ordinarily
4:00 p.m. Eastern Standard Time ("AMEX Closing Time"). Upon verifying the
authenticity of Participant (as determined by the use of the appropriate PIN
Number), Distributor will request that Participant place the Purchase Order.
To do so, Participant must provide ticker symbols when referring to each
iShares series. After Participant has placed the Purchase Order, Distributor
will read the Purchase Order back to Participant. Participant then must
affirm that the Purchase Order has been taken correctly by Distributor. If
Participant affirms that Purchase Order has been taken correctly, Distributor
will issue an Confirmation Number to Participant.
PLEASE NOTE: A PURCHASE ORDER REQUEST IS NOT COMPLETE UNTIL THE CONFIRMATION
NUMBER IS ISSUED BY DISTRIBUTOR.. AN ORDER MAY NOT BE CANCELED BY A
PARTICIPANT AFTER THE CONFIRMATION NUMBER IS ISSUED. INCOMING TELEPHONE CALLS
ARE QUEUED AND WILL BE HANDLED IN THE SQUENCE RECEIVED. CALLS PLACED BEFORE
THE AMEX CLOSING TIME WILL BY PROCESSED EVEN IF THE CALL IS ANSWERED BY
DISTRIBUTOR
AFTER THE AMEX CLOSING TIME. ACCORDINGLY, PARTICIPANT SHOULD NOT HANG UP AND
REDIAL. INCOMING CALLS THAT ARE RECEIVED AFTER THE AMEX CLOSING TIME WILL NOT
BE ANSWERED BY DISTRIBUTOR. ALL TELEPHONE CALLS WILL BE RECORDED BY
DISTRIBUTOR.
2. RECEIPT OF TRADE CONFIRMATION. Subject to the conditions that a properly
-----------------------------
completed telephone Purchase Order has been placed by Participant (either on
its own or another investor's behalf) not later than the AMEX Closing Time,
the Distributor will accept the Purchase Order on behalf of Fund and
Distributor and will confirm in writing to Participant that its Purchase
Order has been accepted by 7:00 p.m. Eastern Standard Time on the Business
Day that the Purchase Order is received.
3. QUALITY ASSURANCE. After a Confirmation Number is issued by Distributor to
-----------------
Participant, Distributor will either fax or email a written version of the
Purchase Order to Participant. Upon receipt, Participant should immediately
telephone Distributor, if the Participate believes that the Purchase Order
has not been taken correctly by Distributor. In addition, Distributor will
telephone Participant within 15 minutes of the fax or e-mail to corroborate
the Purchase Order
4. PROCESSING A PURCHASE ORDER. During the telephone call, Distributor will
---------------------------
request that Participant state that Participant will not own 80% or more of
the shares of an iShares series upon execution of the Purchase Order. If
Participant is not able to so confirm, Distributor has the right to not
accept the Purchase Order.
5. REJECTING OR SUSPENDING PURCHASE ORDERS. Fund or Distributor reserve the
---------------------------------------
absolute right to reject or suspend a Purchase Order if (i) the portfolio of
Deposit Securities delivered is not as specified by Distributor; (ii)
acceptance of the Deposit Securities would have certain adverse tax
consequences to the Index Series; (iii) the acceptance of the Portfolio
Deposit would, in the opinion of counsel, be unlawful; (iv) the acceptance of
the Portfolio Deposit would otherwise, in the discretion of Fund or Adviser,
have an adverse effect on Fund or the rights of beneficial owners of an
iShares series; or (v) circumstances outside the control of Fund, Distributor
or Adviser make it for all practical purposes impossible to process a
Purchase Order. Fund shall notify Participant of its rejection of any
Purchase Order. Fund and Distributor are under no duty, however, to give
notification of any defects or irregularities in the delivery of Portfolio
Deposits nor shall either of them incur any liability for the failure to give
any such notification.
Except as provided herein, all Purchase Orders for Creation Units of iShares
are irrevocable. Fund acknowledges its agreement to return to Participant or
any party for which it is acting any dividend, distribution or other
corporate action paid to Fund in respect of any Deposit Security that is
transferred to Fund that, based on the valuation of such Deposit Security at
the time of transfer, should have been paid to Participant or any party for
which it is acting.
6. CONTRACTUAL SETTLEMENT
----------------------
(a) For Domestic Funds: Except as provided below, Deposit Securities must be
-------------------
delivered through the National Securities Clearing Corporation (NSCC) to
a Depository Trust Company (DTC) account maintained at the applicable
custodian of Fund on or before the Contractual Settlement Date (defined
below). Participant must also make available on or before the Contractual
Settlement Date, by means satisfactory to Fund, immediately available or
same day funds estimated by Fund to be sufficient to pay the Cash
Component next determined after acceptance of the Purchase Order,
together with
the applicable purchase transaction fee (as described in the Prospectus
as "the Normal Clearing Process"). Any excess funds will be returned
following settlement of the issue of the Creation Unit of iShares. The
"Contractual Settlement Date" is the earlier of (i) date upon which all
of the required Deposit Securities, the Cash Component and any other cash
amounts which may be due are delivered to Fund and (ii) trade date +
three business days. Except as provided in the next two paragraphs, a
Creation Unit of iShares of an Index Series will be issued concurrently
with the transfer of good title to Fund of the portfolio of Deposit
Securities through the NSCC's Continuous Net Settlement (CNS) system and
the payment of the Cash Component and the purchase transaction fee
through the DTC.
The Trust reserves the right to permit or require the substitution of an
amount of cash (i.e., a "cash in lieu" amount ) to be added to the Cash
Component to replace any Deposit Security which may not be available in
sufficient quantity for delivery or which may not be eligible for
transfer through the Clearing Process, or which may not be eligible for
transfer through the systems of DTC and hence not eligible for transfer
through the Clearing Process (discussed below) and will be at the expense
of Fund and will affect the value of all Fund shares; but BGFA, subject
to the approval of the Board, may adjust the "Transaction Fee" within the
parameters described below to protect ongoing shareholders.
Any settlement outside the "Normal Clearing Process" is subject to
additional requirements and fees as discussed in the Statement of
Additional Information.
(b) For International Funds: Except as provided below, Deposit Securities
------------------------
must be delivered to an account maintained at the applicable local
subcustodian of Fund on or before the Contractual Settlement Date
(defined below). Participant must also make available on or before the
Contractual Settlement Date, by means satisfactory to Fund, immediately
available or same day funds estimated by Fund to be sufficient to pay the
Cash Component next determined after acceptance of the Purchase Order,
together with the applicable purchase transaction fee (as described in
the Prospectus). Any excess funds will be returned following settlement
of the issue of the Creation Unit of iShares. The "Contractual Settlement
Date" is the earlier of (i) the date upon which all of the required
Deposit Securities, the Cash Component and any other cash amounts which
may be due are delivered to Fund and (ii) the latest day for settlement
on the customary settlement cycle in the jurisdiction where the any of
securities of the iShares Series are customarily traded.
Except as provided in the next two paragraphs, a Creation Unit of iShares
will not be issued until the transfer of good title to Fund of the
portfolio of Deposit Securities and the payment of the Cash Component and
the purchase transaction fee have been completed. When the subcustodian
confirms to Custodian that the required securities included in the
Portfolio Deposit (or, when permitted in the sole discretion of Fund, the
cash value thereof) have been delivered to the account of the relevant
subcustodian, Custodian shall notify Distributor and Adviser, and Fund
will issue and cause the delivery of the Creation Unit of iShares.
Fund may in its sole discretion permit or require the substitution of an
amount of cash (i.e., a "cash in lieu" amount) to be added to the Cash
Component to replace any Deposit Security which may not be available in
sufficient quantity for delivery or for other similar reasons. If Adviser
notifies Distributor that a "cash in lieu" amount will be accepted,
Distributor will notify Participant and Participant shall deliver, on
behalf of itself or the party on whose behalf it is acting, the "cash in
lieu" amount, with any appropriate adjustments as advised by Fund. Any
excess funds will be returned following settlement of the issue of the
Creation Unit of iShares.
In the event that a Portfolio Deposit is incomplete on the settlement
date for a Creation Unit of iShares because certain or all of the Deposit
Securities are missing, Fund will issue a Creation Unit of iShares
notwithstanding such deficiency in reliance on the undertaking of
Participant to deliver the missing Deposit Securities as soon as
possible, which undertaking shall be secured by such Participant's
delivery and maintenance of collateral consisting of cash having a value
at least equal to 125% of the value of the missing Deposit Securities.
The parties hereto agree that the delivery of such collateral shall be
made in accordance with the iShares Cash Collateral Settlement
Procedures, which such procedures shall be provided to Participant by
Distributor upon request. The parties hereto further agree that Fund may
purchase the missing Deposit Securities at any time and Participant
agrees to accept liability for any shortfall between the cost to Fund of
purchasing such securities and the value of the collateral, which may be
sold by Fund at such time, and in such manner, as Fund may determine in
its sole discretion.
7. CASH PURCHASES. When, in the sole discretion of Fund, cash purchases of
--------------
Creation Units of iShares are available or specified for an Index Series,
such purchases shall be effected in essentially the same manner as in-kind
purchases thereof. In the case of a cash purchase, Participant must pay the
cash equivalent of the Deposit Securities it would otherwise be required to
provide through an in-kind purchase, plus the same Cash Component required
to be paid by an in-kind purchaser. In addition, to offset Fund's brokerage
and other transaction costs associated with using the cash to purchase the
requisite Deposit Securities, Participant must pay a fixed purchase
transaction fee, plus an additional variable charge for cash purchases,
which is expressed as a percentage of the value of the Deposit Securities.
The transaction fees for in-kind and cash purchases of Creation Units of
iShares are described in the Prospectus.
ANNEX II -- PART B
TO PLACE AN ORDER FOR REDEMPTION OF
CREATION UNIT(S) OF iSHARES
1. PLACING A REDEMPTION ORDER. Redemption Orders for Creation Units iShares
--------------------------
may be initiated only on days that the American Stock Exchange is open for
trading. To begin a Redemption Order, Participant must telephone
Distributor at (▇▇▇) ▇▇▇-▇▇▇▇. This telephone call must be made by an
Authorized Person of Participant not later than the closing time of the
regular trading session on the American Stock Exchange which is ordinarily
-------
4:00 p.m. Eastern Standard Time ("AMEX Closing Time"). Upon verifying the
authenticity of Participant (as determined by the use of the appropriate
PIN Number), Distributor will request that Participant place the Redemption
Order. To do so, Participant must provide ticker symbols when referring to
each iShares series. After Participant has placed the Redemption Order,
Distributor will read the Redemption Order back to Participant. Participant
then must affirm that the Redemption Order has been taken correctly by
Distributor. If Participant affirms that Redemption Order has been taken
correctly, Distributor will issue an Confirmation Number to Participant.
PLEASE NOTE: A REDEMPTION ORDER REQUEST IS NOT COMPLETE UNTIL THE
CONFIRMATION NUMBER IS ISSUED BY DISTRIBUTOR. AN ORDER MAY NOT BE CANCELED
BY A PARTICIPANT AFTER THE CONFIRMATION NUMBER IS ISSUED. INCOMING
TELEPHONE CALLS ARE QUEUE AND WILL BE HANDLED IN THE SEQUENCE RECEIVED.
CALLS PLACED BEFORE THE AMEX CLOSING TIME WILL BY PROCESSED EVEN IF THE
CALL IS ANSWERED BY DISTRIBUTOR AFTER THE AMEX CLOSING TIME. ACCORDINGLY,
PARTICIPANT SHOULD NOT HANG UP AND REDIAL. INCOMING CALLS THAT ARE RECEIVED
AFTER THE AMEX CLOSING TIME WILL NOT BE ANSWERED BY DISTRIBUTOR. ALL
TELEPHONE CALLS MAY BE RECORDED BY DISTRIBUTOR.
2. RECEIPT OF CONFIRMATION. Subject to the conditions that a duly completed
-----------------------
Redemption Order is received by Distributor from Participant on behalf of
itself or another redeeming investor by the AMEX Closing Time, the
Distributor will accept the Redemption Order on behalf of Fund and
Distributor and will confirm in writing to Participant that its Redemption
Order has been accepted by 7:00 p.m. Eastern Standard Time on the Business
Day the Redemption Order is received.
3. QUALITY ASSURANCE. After an Confirmation Number is issued by Distributor
-----------------
to Participant, Distributor will either fax or email a copy of the
Redemption Order to Participant. Upon receipt, Participant should
immediately telephone Distributor, if the Participant believes that the
Redemption Order has not been taken correctly by Distributor. In addition,
Distributor will telephone Participant within 15 minutes of the fax or e-
mail to corroborate the Redemption Order.
In the Redemption Order, Participant will be required to acknowledge its
agreement on behalf of itself and any party for which it is acting
(whether as a customer or otherwise) to return to Fund any dividend,
distribution or other corporate action paid to it or to the party for
which it is acting in respect of any Deposit Security that is transferred
to Participant or any party for which it is acting that, based on the
valuation of such Deposit Security at the
time of transfer, should be paid to the Index Series to which the
Redemption Order relates. In the Redemption Order, Participant will also
be required to acknowledge its agreement on behalf of itself and any
party for which it is acting (whether as a customer or otherwise) that
Fund is entitled to reduce the amount of money or other proceeds due to
Participant or any party for which it is acting by an amount equal to any
dividend, distribution or other corporate action to be paid to it or to
the party for which it is acting in respect of any Deposit Security that
is transferred to Participant or any party for which it is acting that,
based on the valuation of such Deposit Security at the time of transfer,
should be paid to the Index Series to which the Redemption Order relates.
4. TAKING DELIVERY OF DEPOSIT SECURITIES. The Deposit Securities constituting
-------------------------------------
in-kind redemption proceeds will be delivered to the appropriate account
which must be indicated in Participant's Standing Redemption Instructions.
An Authorized Person of Participant may amend Participant's Standing
Redemption Instructions from time to time in writing to Distributor and
Fund in a form approved by Fund. A redeeming Beneficial Owner or
Participant acting on behalf of such Beneficial Owner must maintain
appropriate securities broker-dealer, bank or other custody arrangements to
which account such Deposit Securities will be delivered. Redemptions of
-----
iShares for Deposit Securities will be subject to compliance with
applicable United States federal and state securities laws.
5. CONTRACTUAL SETTLEMENT.
----------------------
(a) For Domestic Funds: Except as provided below, the iShares must be
-------------------
delivered through the National Securities Clearing Corporation (NSCC)
to a Depository Trust Company (DTC) account maintained at the
applicable custodian of Fund on or before the Contractual Settlement
Date (defined below). The Fund will make available on the Contractual
Settlement Date, the Cash Component next determined after acceptance
of the Redemption Order, less the applicable purchase transaction fee
(as described in the Prospectus as "the Normal Clearing Process"). The
"Contractual Settlement Date" is the date upon which all of the
required iShares must be delivered to the fund and, the Deposit
Securities, Cash Component less any fees are delivered by the Fund to
the Participant (ordinarily trade date + three business days). Except
as provided in the next two paragraphs, the Deposit Securities
representing a Redemption Unit will be issued concurrently with the
transfer of good title to Fund of the required aggregation of iShares
through the NSCC's Continuous Net Settlement (CNS) system and the
delivery of the Cash Component less the purchase transaction fee
through the DTC.
The Trust reserves the right to permit or require the substitution of
an amount of cash (i.e., a "cash in lieu" amount ) to be added to the
Cash Component to replace any Deposit Security which may not be
available in sufficient quantity for delivery or which may not be
eligible for transfer through the Clearing Process, or which may not
be eligible for transfer through the systems of DTC and hence not
eligible for transfer through the Clearing Process (discussed below)
and will be at the expense of Fund and will affect the value of all
Fund shares; but BGFA, subject to the approval of the Board, may
adjust the "Transaction Fee" within the parameters described below to
protect ongoing shareholders. Any settlement outside the "Normal
Clearing Process" is subject to additional requirements and fees as
discussed in the Statement of Additional Information.
(b) For International Funds: Except as provided below, iShares must be
------------------------
delivered to an account maintained at the applicable local
subcustodian of Fund on or before the business day immediately
following the date on which the redemption order was placed. The Fund
will also make available on the Contractual Settlement Date,
immediately available or same day funds sufficient to pay the Cash
Component next determined after acceptance of the Purchase Order, less
the applicable redemption transaction fee (as described in the
Prospectus). The "Contractual Settlement Date" is the earlier of (i)
the date upon which all of the Deposit Securities are delivered to
Participant and (ii) the latest day for settlement on the customary
settlement cycle in the jurisdiction where the any of securities of
the iShares Series are customarily traded.
Deliveries of redemption proceeds by the iShares Series generally will
be made within three Business Days. Due to the schedule of holidays in
certain countries, however, the delivery of in-kind redemption
proceeds may take longer than three Business Days after the day on
which the Redemption Order is placed
Except as provided in the next two paragraphs, the Deposit Securities
will not be issued until the transfer of good title to Fund of the
required iShares aggregation has been completed. When the subcustodian
confirms to Custodian that the required iShares (or, when permitted in
the sole discretion of Fund, the cash value thereof) have been
delivered to the account of the relevant subcustodian, Custodian shall
notify Distributor and Adviser, and Fund will issue and cause the
delivery of the Deposit Securities.
Fund may in its sole discretion permit or require the substitution of
an amount of cash (i.e., a "cash in lieu" amount) to be added to the
Cash Component to replace any Deposit Security which may not be
available in sufficient quantity for delivery or for other similar
reasons. If Adviser notifies Distributor that a "cash in lieu" amount
will be delivered, Distributor will notify Participant and Participant
shall receive, on behalf of itself or the party on whose behalf it is
acting, the "cash in lieu" amount, with any appropriate adjustments as
advised by Fund.
In the event that an aggregation of iShares is incomplete on the
settlement date for a Redemption Unit of iShares, the Fund will issue
the Deposit Securities notwithstanding such deficiency in reliance on
the undertaking of Participant to deliver the missing iShares as soon
as possible, which undertaking shall be secured by such Participant's
delivery and maintenance of collateral consisting of cash having a
value at least equal to 125% of the value of the missing iShares. The
parties hereto agree that the delivery of such collateral shall be
made in accordance with the iShares Cash Collateral Settlement
Procedures, which such procedures shall be provided to Participant by
Distributor upon request. The parties hereto further agree that Fund
may purchase the missing iShares at any time and Participant agrees to
accept liability for any shortfall between the cost to Fund of
purchasing such securities and the value of the collateral, which may
be sold by Fund at such time, and in such manner, as Fund may
determine in its sole discretion.
6. CASH REDEMPTIONS. In the event that, in the sole discretion of Fund, cash
----------------
redemptions are permitted or required by Fund, proceeds will be paid to
Participant redeeming shares on behalf of the redeeming investor as soon as
practicable after the date of redemption.
7. STANDING REDEMPTION INSTRUCTIONS. Annex V hereto contains Participant's
--------------------------------
Standing Redemption Instructions, which includes information identifying
the account(s) into which Deposit Securities of each Index Series and any
other redemption proceeds should be delivered by Fund pursuant to a
Redemption Order.
ANNEX II -- PART C
FLOW PROCESS
This Annex II supplements the Fund's Prospectus with respect to the
procedures to be used by the Distributor and Transfer Agent in processing an
order for the creation or redemption of iShares.
A Participant is required to have signed the Participant Agreement. assign
a personal identification number to each Authorized Participant authorized to
act for the Participant. This will allow a Participant through its Authorized
Participant(s) to place a creation or redemption order with respect to iShares.
The Authorized Participant and Distributor shall implement the "Exchange
Traded Funds Flow Process" as agreed to by the parties from time to time.
EXCHANGE TRADED FUNDS FLOW PROCESS
----------------------------------------------------------------------------------------------------
ORIGINATOR ACTIVITY
---------- --------
----------------------------------------------------------------------------------------------------
1. AP calls on SEI's recorded 1-800 1. SEI rep greets caller.
number to place a share creation
and/or redemption order. These
trades are to be placed by 4:00 PM
EST.
----------------------------------------------------------------------------------------------------
2. AP identifies his name, the 2. SEI rep selects the AP from drop down box to pull
Institution he represents, and PIN up the account registration and list of authorized
#. transacters. The SEI rep verifies that the caller is
authorized to place trades on behalf of that
institution. The rep then asks the AP for his PIN #.
The rep types the number, which will be alpha numeric
into the database. The SEI rep will read to the AP a
statement confirming that the AP will not be placing
trades that would raise their total holdings of 80%
or more of each fund. The trader confirms the rule
and the rep will click "ok". The database will then
open to a trading input screen for the rep to start
entering trades online.
----------------------------------------------------------------------------------------------------
3. AP tells SEI Rep that he wants 2. SEI rep is checking the creation or redemption
to place a creation or redemption box and then types in the fund's ticker. If the
of units in a specific fund. The transacter is eligible to trade in that fund, the
AP states the Fund name and ticker. fund name will appear.
Exception: The redemption process for the iShares
international funds will include an extra step.
These funds require confirmation from the IBT
Transfer Agency before a redemption can be processed.
The AP wishing to redeem from these funds will place
a call to an SEI rep prior to 4:00 PM EST with an
"Intent to Redeem". The AP will provide the number
of units and the fund that they wish to redeem. This
call is necessary to verify that the iShares unit has
been returned to the custodian before an actual
redemption trade can take place. The SEI rep will
enter the redemption into the ETF system and as with
a domestic redemption, an affirmation will be
produced and sent via email or fax to the AP. The
SEI rep will call IBT to get confirmation that
iShares units have been delivered so that SEI can
finalize the redemption with the AP. The IBT
Transfer Agency will confirm that the iShare unit has
been delivered to the custody account, and will email
SEI that the redemption can be processed. After IBT
confirms the redemption, SEI will call the AP to
approve the trade
----------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
on the affirmation. This call may not come within the normal
fifteen minute window if the iShares units are not delivered
to the custody account immediately. If the iShares unit is
not delivered by 4:00 PM EST to the custody account, AP
will no longer be able to place the redemption for that trade
date and will need to place the trade the following day if it
is still necessary.
-------------------------------------------------------------------------------------------------------------
4. AP states the number of units he 4. SEI rep types in the number of units to be created or
wants to create or redeem. Steps 4 redeemed. Steps 3 and 4 continue until the AP has completed
and 5 continue until the AP has all transactions.
completed all transactions.
-------------------------------------------------------------------------------------------------------------
5. AP states he has finished 5. The database will summarize all trading into one online text
trading. box, which the SEI rep reads back to the AP, asking for a verbal
confirmation. The representative reads back the fund's ticker
and name, along with create or redeem and the amount of units.
-------------------------------------------------------------------------------------------------------------
6. The AP confirms the statement. 6. SEI rep then reads to the AP a single system generated trade
confirm number for all trades placed. Also, the SEI rep sends a
written affirmation to the AP via a system-generated fax of all
trades.
-------------------------------------------------------------------------------------------------------------
7. The AP receives fax. 7.
. The SEI rep will contact the AP within 15 minutes after
faxing the affirmation to ensure all trades are good. Once
this second verbal confirmation is given, the trades are
released as "good". Contact of the AP is done on a "best
efforts" level. Meaning, if the SEI rep can not get in touch
with the AP, then SEI will release the trade as it was taken.
The AP will assume responsibility for an incorrect trade if
they are not available for the second phone call to reaffirm
trades placed with a SEI rep.
. If trades are incorrect, the SEI rep will delete the first
trade and reenter the corrected trade. A second
affirmation will be faxed to the AP with all trades placed
that day. The corrected trade will be coded on the
affirmation so that the AP can see the correction. A
second SEI rep will call the AP back to confirm the
correction.
Exception: If an "Intent to Redeem" was called for an
international fund, the AP will not receive a call from an
SEI rep to approve the affirmation until IBT confirms that
the iShares units have been delivered to the custodian.
-------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
8. Once all trades have been 8. SEI rep checks trades pending file in database to
confirmed for the 2nd time, the SEI insure all trades have been approved. Trades not
database creates an interface file approved will be highlighted for approval purposes.
going to IBT. A trade file will not be generated if there are
unapproved trades in the system.
------------------------------------------------------------------------------------------------
9. After balancing interface file 9. IBT receives trade file, runs through validation
with database pend file, SEI rep process on their end, and creates an acknowledgement
transmits file via FTP to IBT and file to send back to SEI.
BGI. SEI rep will also email a PDF
file summarizing the trades sent in
the FTP file.
------------------------------------------------------------------------------------------------
10. IBT transmits acknowledgement 10. SEI rep receives acknowledgement from IBT and an
file to SEI confirming the # of auto reconciliation process is done to account for
units received from SEI, # of all records sent.
orders received and # of rejects.
IBT will call SEI if any trades
reject.
------------------------------------------------------------------------------------------------
11. If IBT sends back reject trades. 11. SEI will generate an additional interface to send
to IBT. The additional transmission will include only
those trades that previously rejected.
------------------------------------------------------------------------------------------------
12. IBT transmits to SEI the cash 12. SEI will auto-fax confirmations including cash
component and full confirmation of amount to AP.
trades.
------------------------------------------------------------------------------------------------
* Times may vary depending on the trade volume from APs.
ANNEX III
iShares Trust
FORM OF CERTIFIED AUTHORIZED PERSONS OF PARTICIPANT
The following are the names, titles and signatures of all persons (each an
"Authorized Person") authorized to give instructions relating to any activity
contemplated by this Authorized Participant Agreement or any other notice,
request or instruction on behalf of the Participant pursuant to this Authorized
Participant Agreement.
Name: __________________
Title: __________________
Signature: __________________
Name: __________________
Title: __________________
Signature: __________________
Name: __________________
Title: __________________
Signature: __________________
The undersigned, [name], [title], [company], does hereby certify that the
persons listed above have been duly elected to the offices set forth beneath
their names, that they presently hold such offices, that they have been duly
authorized to act as Authorized Participants pursuant to the Authorized
Participant Agreement by and among iShares Trust, SEI Investments Distribution
Company and [name of Participant], dated [date] and that their signatures set
forth above are their own true and genuine signatures.
In Witness Whereof, the undersigned has hereby set his/her hand and the seal of
[company].
Date: _________________ ___________________
[name, title]
ANNEX IV
iShares Trust
FUND SUBCUSTODIAN ACCOUNTS FOR DELIVERY OF DEPOSIT SECURITIES
The subcustodian accounts into which a Participant should deposit the
securities constituting the Deposit Securities of each Index Series are set
forth below:
iShares S&P 500 Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares S&P 100 Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares S&P ▇▇▇/▇▇▇▇▇ ▇▇▇▇▇▇ Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares S&P 500/BARRA Value Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares S&P MidCap 400 Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares S&P ▇▇▇▇▇▇ ▇▇▇/▇▇▇▇▇ ▇▇▇▇▇▇ Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares S&P MidCap 400/BARRA Value Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares S&P SmallCap 600 Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares S&P SmallCap 600 Fund/BARRA Growth Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares S&P SmallCap 600 Fund/BARRA Value Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares S&P Euro Plus Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares S&P/TSE 60 Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ Total Market Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ U.S. Basic Materials Sector Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ U.S. Consumer Cyclicals Sectors Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ U.S. Consumer Non-Cyclicals Sector Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ U.S. Energy Sector Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ U.S. Financial Sector Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ U.S. Healthcare Sector Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ U.S. Industrials Sector Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ U.S. Technology Sector Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ U.S. Telecommunications Sector Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ U.S. Utilities Sector Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ U.S. Chemicals Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ U.S. Financial Services Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ Internet Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares Dow ▇▇▇▇▇ U.S. Real Estate Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares ▇▇▇▇▇▇▇ 3000 Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares ▇▇▇▇▇▇▇ 3000 Growth Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares ▇▇▇▇▇▇▇ 3000 Value Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares ▇▇▇▇▇▇▇ 2000 Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares ▇▇▇▇▇▇▇ 2000 Growth Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares ▇▇▇▇▇▇▇ 2000 Value Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares ▇▇▇▇▇▇▇ 1000 Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares ▇▇▇▇▇▇▇ 1000 Growth Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
iShares ▇▇▇▇▇▇▇ 1000 Value Fund
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________
ANNEX V
iShares Trust
PARTICIPANT ACCOUNTS FOR DELIVERY OF DEPOSIT SECURITIES
The accounts into which the fund should deposit the securities constituting
the Deposit Securities of each Index Series upon redemption are set forth below:
Account Name: __________________
Account Number: __________________
Other Reference Number: __________________