A 5298    
P&S 4868
August 8, 2001 

TO: ALL PARTICIPANTS

ATTENTION: MANAGING PARTNER / OFFICER, OPERATIONS PARTNER / OFFICER, MANAGER P & S DEPARTMENT, MANAGER DATA PROCESSING DEPARTMENT

SUBJECT:  NSCC WILL INCLUDE THE MSCI EAFE FOREIGN ISHARES SM IN ITS FOREIGN INDEX SECURITY SYSTEM

The National Securities Clearing Corporation will include in its foreign index security processing system the MSCI EAFE iShares, which will trade on the American Stock Exchange. iShares securities represent ownership in open-ended investment companies registered under the 1940 Act established to accumulate and hold portfolios of common stocks intended to track the price performance and dividend yield of various well-known indices. Clearing and trading information pertinent to the MSCI EAFE iShares follows:

Index Share Name

Trading Symbol

CUSIP

First Trading Date

iShares MSCI EAFE

EFA

464287465

August 17, 2001

 

NOTE: As an accommodation to participants, NSCC will add the MSCI EAFE foreign iShares portfolio to its Foreign Portfolio Composition File (PCF) on or about Monday August 6 , 2001. This file also contains other international indexes.

Unlike domestic index securities, the MSCI EAFE iShares is based on foreign stocks that do not clear and settle through the NSCC Continuous Net Settlement System (CNS) or the NSCC Balance Order Accounting Settlement system. Consequently, NSCC will not accept locked-in create or redeem instructions for the MSCI EAFE iShares, will not burst them into their underlying components and will not guarantee the cash amounts.

Participants will create the new foreign iShares by delivering the appropriate number of the index’s underlying stock shares to the Transfer Agent / Custodian through foreign custodians in the home country where the component stocks are domiciled. The MSCI EAFE iShares security itself will be settled via NSCC’s Continuous Net Settlement (CNS) system in a conventional manner, like any domestic stock. The Transfer Agent and Custodian for these iShares is Investors Bank and Trust.

In order to create iShares, an NSCC participant must enter into a standardized authorized participant agreement with the Transfer Agent / Custodian and Distributor. The authorized participant (AP) may then place a creation order with the Distributor. The Distributor will instruct the AP as to the procedures for effecting the clearance and settlement of the foreign ordinary stocks in the home country where the component stocks are domiciled. The Distributor for the MSCI EAFE iShares is SEI Investments Inc. NSCC does not participate in this overseas settlement process. Consequently, there is no foreign counterpart to the Domestic Index Instruction Detail Report.

 

Useful Information:

If you have additional questions, please contact Participant Services at 212-855-4155 or email the undersigned estaloff@dtcc.com.

 

Elena Staloff
Director, DTCC Product Development