What are Index Shares?
Index Shares represent shares of ownership in either fund or unit investment trusts that hold portfolios of common stocks which are designed to generally correspond to the price and yield performance of their underlying portfolios of securities, either broad market, sector or international. Index Shares give investors the opportunity to buy or sell an entire portfolio of stocks in a single security, as easily as buying or selling a share of stock. They offer a wide range of investment opportunities.

Where can I buy or sell Index Shares?
You can buy or sell Index Shares through a broker of your choice, just as you buy stock.

How easily can I buy or sell Index Shares?
As easily as you can buy or sell shares of stock, Index Shares are listed and traded throughout the trading day while traditional index mutual funds can generally be purchased or redeemed only at an end-of-day closing price.

What is the minimum purchase?
You can purchase as little as one share.

Why invest in an index?
Indexing, often called "passive management," involves investing in a group of stocks that represent the composition of a broad-market, sector, or international index. Index funds offer "market level" performance, they aim to generally match the market performance of a specific index in advancing or declining markets. Passive indexed investments, because they generally have lower management and expense fees, may outperform many actively managed funds over the long term.

What are the benefits to Index Shares trading as stocks?
Index Share offer several advantages to investors:

• buy and sell at any time during the trading day
• instantly get exposure to a portfolio of stocks of your choice
• ability to buy on margin (see below for details)
• no sales loads, although brokerage commissions will apply
• no high management and sponsor fees
• tax efficiencies

Can Index Shares be sold short?
Yes. All Index Shares may be sold short, representing the sale of "borrowed" shares in anticipation of lower prices when the borrowed shares must be replaced. Certain Index Share products are also exempt from the rule that requires shares to be sold short only on an "uptick" (i.e., a last sale price higher than that of a security’s preceding last sale.

Can Index Shares be purchased on margin?
Index Shares may be purchased on margin, generally subject to the same terms that apply to common stocks. You should contact your broker regarding initial and maintenance margin requirements.

Is there a sales load on Index Shares?
While Index Shares are not subject to sales loads, ordinary brokerage commissions for purchases and sales will apply.

Do I get paid dividends and/or capital gains?
Index Share holders are eligible to receive their portion of dividends, if any, accumulated on the stocks held in trust, less fees and expenses of the trust. Of course, little if any dividend distributions can be expected on certain stock portfolios, based on past performance of the stocks.

Is the value of an Index Share equivalent to 100 percent of the value of the underlying Index?
Not necessarily. The share price of many Index Shares is set at a percentage of the Index upon which they are based. The chart below illustrates the relationship between the price of an Index Share and the level of the underlying Index. As an example, if the Nasdaq-100 Index^® were at 4200 then the share price of the Nasdaq-100 Index Tracking Stock^SM (QQQ), at approximately 1/40th the value of the Index, would be approximately $105 per share.

 

Index Share Product	Approximate relationship to underlying index
QQQ (Nasdaq-100 Index Tracking StockSM)	1/40
SDPRs® (Standard & Poor’s Depositary Receipts)	1/10
MidCap SPDRsTM (Standard & Poor’s MidCap 400 Depositary ReceiptsTM)	1/5
Select Sector SPDRs® (Select Sector SPDR Funds)	1/10
DIAMONDS® (The Dow Industrials)	1/100
iShares - Barclays Global Investors	Varies

Where do Index Shares initially come from?
Index Shares are "created" by large investors and institutions in block- sized units of shares (or multiples thereof) known as "Creation Units" of a respective Index Share. A creation requires a deposit with the trustee of a specified number of shares of a portfolio of stocks closely approximating the composition of a specific index and cash equal to accumulated dividends in return for specific Index Shares. Similarly, block-sized units of Index Shares can be redeemed in return for a portfolio of stocks approximating the index and a specified amount of cash. A unit of 50,000 shares (or multiples thereof) is required to create SDPRs, Nasdaq-100 Index Tracking Stock, Select Sector Funds and DIAMONDS, while a unit of 25,000 shares is required to create MidCap SPDRs.

Where can I find Index Shares listed in the newspaper?
You can find Index Shares listed in the financial section of many newspapers under the market they are traded.

What are the trading hours for Index Shares?
Index Shares based on broad based indexes trade until 4:15 p.m., New York time. Select Sector SPDR Funds trade until 4:00 p.m. Eastern Time.  iShares Sector Funds trade until 4:15 p.m. Eastern Time.  Index Shares based on foreign stock indexes trade until 4:00 p.m., Eastern time.