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Investment Company Act of 1940 - Sections 2(a)(32), 5(a)(1), 17(a), 22(d), 22(e) and Rule 22c-1
Barclays Global Fund Advisors et al.

March 12, 2009

RESPONSE OF THE OFFICE OF INVESTMENT COMPANY REGULATION DIVISION OF INVESTMENT MANAGEMENT

Our Ref. No. 2009-1-ICR Barclays Global Fund Advisors, et al.

In your letter of March 10, 2009, you request our assurance that we would not recommend that the Securities and Exchange Commission (the “Commission”) take any enforcement action under sections 2(a)(32), 5(a)(1), 17(a), 22(d), and 22(e) of the Investment Company Act of 1940 (the “Act”), or rule 22c-1 under the Act, against Barclays Global Fund Advisors (“BGFA”) or iShares Trust (the “Company”) if certain existing series (each, a “Fund”)¹ of the Company that operate as exchange-traded funds pursuant to a number of exemptive orders (the “Prior Orders”)² continue to use a benchmark index, the sponsor of which has recently become an affiliated person, or an affiliated person of an affiliated person, of BGFA and the Company, as described in your letter.³

You state that the investment objective of each Fund is to seek to provide investment results that correspond generally to the price and yield performance of publicly traded securities included in a particular benchmark index (an “Index”). You state that the Funds seek to track an Index (each, a “Lehman Index,” and collectively, the “Lehman Indices”) originally compiled, sponsored and maintained by a division (the “Lehman Index Sponsor”) of Lehman Brothers Holdings, Inc. (“LBHI”). You state that BGFA, the investment adviser to each of the Funds, is a wholly-owned subsidiary of Barclays Global Investors, N.A. (“BGI”). You further state that BGI is a majority-owned subsidiary of Barclays Bank PLC United Kingdom (“Barclays”).

You state that the Prior Orders upon which each Fund relies are based, among other things, on a representation contained in the applications for the relief that provides that no entity that creates, compiles, sponsors or maintains a benchmark index is, or will be, an affiliated person, as defined in section 2(a)(3) of the Act, or an affiliated person of an affiliated person of the Company, BGFA, the promoter of the Funds, or the distributor of the Funds.⁴

You state that on September 15, 2008, LBHI filed a voluntary petition seeking relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. You state that on September 16, 2008, Barclays Capital Inc. (“BarCap”), a registered broker-dealer that is a wholly-owned subsidiary of Barclays, entered into an agreement with LBHI and certain of its affiliates pursuant to which BarCap would purchase certain assets of LBHI, including the Lehman Index Sponsor. You state that on September 22, 2008, BarCap completed the purchase of LBHI’s North American investment banking, fixed income, equities sales and trading and research operations (the “Acquisition”), including the Lehman Index Sponsor and the Lehman Indices. As a result of the Acquisition, you state that the Lehman Index Sponsor (referred to following the Acquisition as, the “BarCap/Lehman Index Sponsor”) became an affiliated person or an affiliated person of an affiliated person of BGFA and the Company. You further state that BGFA and the Company propose to continue to use the Lehman Indices as the benchmark indices for the Funds.⁵

You state that BarCap believed it was necessary to complete the Acquisition quickly to maximize the value of LBHI’s assets, including the Lehman Index Sponsor. You also state that BGFA and the Company believe that it would have been impracticable to attempt to amend the Prior Orders before the date of the Acquisition to allow the Funds to track Indices created, compiled, sponsored or maintained by an affiliated person or an affiliated person of an affiliated person of BGFA or the Company. Accordingly, you seek our assurances that we will not recommend that the Commission institute enforcement action under sections 2(a)(32), 5(a)(1), 17(a), 22(d), and 22(e) or rule 22c-1 against BGFA or the Company if the Funds continue to rely on the Prior Orders while using the Lehman Indices as benchmark indices even though the BarCap/Lehman Index Sponsor is an affiliated person or an affiliated person of an affiliated person of BGFA and the Company.

You argue that the Lehman Indices were not created solely for the Funds’ use and were created well in advance of the respective launch dates of the Funds. You state that other investment companies, including other exchange-traded funds that are not affiliated with the Funds and BGFA, also use the Lehman Indices as their benchmark indices. In addition, you represent that BGFA and the Company will continue to comply with the terms and conditions of the Prior Orders, except as modified by the relief requested in this letter.⁶ You further state that BGFA and the Company agree to the following conditions:

(1) BGFA and the BarCap/Lehman Index Sponsor have been and will continue to be separate legal entities that have no overlapping officers, directors or employees;

(2) There is an effective information barrier between BGFA and the BarCap/Lehman Index Sponsor, and BGFA has not been and will not be provided with information about a change in index methodology by the BarCap/Lehman Index Sponsor before such information is provided to other persons outside of the BarCap/Lehman Index Sponsor;

(3) BGFA has not had and will not have a preferential ability to influence the index methodology determined by the BarCap/Lehman Index Sponsor over other institutional investors; and

(4) BGFA has not sought and will not seek to influence the index methodology determined by the BarCap/Lehman Index Sponsor in a way that would disproportionately benefit the Barclays organization.

Based on all of the facts and representations made in your letter, and in particular the expedited nature of the Acquisition, the conditions specifically listed above, and the representation that BGFA and the Company will comply with the terms and conditions of the Prior Orders, except that the Funds will track an Index created, compiled, sponsored or maintained by the BarCap/Lehman Index Sponsor, we would not recommend that the Commission take any action under sections 2(a)(32), 5(a)(1), 17(a), 22(d), and 22(e) of the Act, or rule 22c-1 under the Act, against BGFA or the Company, if the Funds continue to rely on the Prior Orders.

This response expresses the Division’s position on enforcement action only, and does not purport to express any legal conclusions concerning the issues presented. Any facts or representations different from those presented in your letter might result in a different conclusion. In addition, the relief provided herein shall expire on the effective date of any Commission rule under the Act that provides relief permitting the operation of index-based exchange-traded funds.

¹ The relief granted in this letter relates only to the Funds named in footnote 3 of your letter.

² Barclays Global Fund Advisors, et al., Investment Company Act Release No. 25622 (June 25, 2002), as subsequently amended by iShares Trust, et al., Investment Company Act Release No. 26006 (Apr. 15, 2003), Barclays Global Fund Advisors, et al., Investment Company Act Release No. 26175 (Sept. 8, 2003), Barclays Global Fund Advisors, et al., Investment Company Act Release No. 27417 (June 23, 2006) and Barclays Global Fund Advisors, et al., Investment Company Act Release No. 27661 (Jan. 17, 2007).

³ This letter confirms oral no-action relief provided by Elizabeth G. Osterman to Margery K. Neale and P. Jay Spinola on September 19, 2008.

⁴ Section 2(a)(3) of the 1940 Act provides, among other things, that any person directly or indirectly controlling, controlled by, or under common control with another person is an affiliated person of such person. It also provides that an investment adviser is an affiliated person of the investment company that it advises.

⁵ BarCap recently re-branded the Lehman Indices under the BarCap unified family of indices using the “Barclays Capital Indices” name.

⁶ Consistent with the description of the index licensing arrangement between BGI and the Lehman Index Sponsor in the applications for the Prior Orders, BGI has entered into a licensing agreement with the BarCap/Lehman Index Sponsor and will pay all such license fees owed to the BarCap/Lehman Index Sponsor. Further, BGI, as permitted by the terms of the licensing agreement, has sub-licensed its rights under the agreement to the Company at no cost to the Company.

Incoming Letter

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The Incoming Letter is in Acrobat format.