[Federal Register Volume 68, Number 162 (Thursday, August 21, 2003)]
[Notices]
[Pages 50561-50562]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-21447]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 26151; 812-13003]


Barclays Global Fund Advisors, et al.; Notice of Application

August 15, 2003.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application to amend a prior order under section 
6(c) of the Investment Company Act of 1940 (``Act'') granting an 
exemption from sections 2(a)(32), 5(a)(1), and 22(d) of the Act and 
rule 22c-1 under the Act, and under sections 6(c) and 17(b) of the Act 
granting an exemption from sections 17(a)(1) and (a)(2) of the Act.

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Summary of Application: Applicants request an order to amend a prior 
order that permits: (a) An open-end management investment company, 
whose series are based on certain fixed-income securities indices, to 
issue shares of limited redeemability; (b) secondary market 
transactions in the shares of the series to occur at negotiated prices; 
and (c) affiliated persons of the series to deposit securities into, 
and receive securities from, the series in connection with the purchase 
and redemption of aggregations of the series' shares (``Prior 
Order'').\1\ Applicants seek to amend the Prior Order in order to offer 
additional series based on different fixed-income securities indices.
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    \1\ Barclays Global Fund Advisors, et al., Investment Company 
Act Release Nos. 25594 (May 29, 2002) (notice) and 25622 (June 25, 
2002) (order).

Applicants: Barclays Global Fund Advisors (``Adviser''), iShares Trust 
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(``Trust'') and SEI Investments Distribution Co. (``Distributor'').

Filing Dates: The application was filed on August 15, 2003.

Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on September 5, 2003 and should be accompanied by proof of 
service on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons may request notification of a hearing by writing to 
the Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 5th Street, NW., Washington, DC 
20549-0609. Applicants: Richard F. Morris, Esq., Barclays Global Fund 
Advisors,
c/o Barclays Global Investors, N.A., 45 Fremont Street, San Francisco, 
CA 94105; Susan C. Mosher, Esq., iShares Trust, c/o Investors Bank & 
Trust Company, 200 Clarendon Street, Boston, MA 02116; and William E. 
Zitelli, Esq., SEI Investments Distribution Co., One Freedom Valley 
Drive, Oaks, PA 19456.

FOR FURTHER INFORMATION CONTACT: Laura J. Riegel, Senior Counsel, at 
(202) 942-0567, or Michael W. Mundt, Senior Special Counsel, at (202) 
942-0564 (Division of Investment Management).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
Commission's Public Reference Branch, 450 5th Street, NW., Washington, 
DC 20549-0102 (tel. 202-942-8090).

Applicants' Representations

    1. The Trust is an open-end management investment company

[[Page 50562]]

registered under the Act and established in the state of Delaware. The 
Trust is organized as a series fund with multiple series. The Adviser, 
an investment adviser registered under the Investment Advisers Act of 
1940, will serve as investment adviser to each New Fund. The 
Distributor, a broker-dealer unaffiliated with the Adviser and 
registered under the Securities Exchange Act of 1934, serves as the 
principal underwriter for the Trust.
    2. The Trust is currently permitted to offer seven series based on 
fixed-income securities indices in reliance on the Prior Order. 
Applicants seek to amend the Prior Order to permit the Trust to offer 
11 new series based on fixed-income securities indices (each, a ``New 
Fund'') that, except as described in the application, would operate in 
a manner identical to the existing series of the Trust that are subject 
to the Prior Order.\2\
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    \2\ If the amended order is granted, the New Funds would also be 
able to rely on an exemptive order granting certain relief from 
section 24(d) of the Act to the existing series of the Trust that 
are subject to the Prior Order. See iShares, Inc., et al., 
Investment Company Act Release Nos. 25595 (May 29, 2002) (notice) 
and 25623 (June 25, 2002) (order).
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    3. Each New Fund will invest in a portfolio of securities generally 
consisting of the component securities of a specified fixed income 
securities index (each, an ``Underlying Index'').\3\ No entity that 
creates, compiles, sponsors, or maintains an Underlying 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 Trust, the 
Adviser, the Distributor, or a promoter of a New Fund.
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    \3\ The Underlying Indices for the New Funds are Lehman Brothers 
Short U.S. Treasury Index, Lehman Brothers 3-7 Year U.S. Treasury 
Index, Lehman Brothers 10-20 Year U.S. Treasury Index, Lehman 
Brothers U.S. Treasury Inflation Notes Index (``TIPS Index''), 
Lehman Brothers U.S. Credit Index, Lehman Brothers Intermediate U.S. 
Credit Index, Lehman Brothers Intermediate U.S. Government/Credit 
Index, Lehman Brothers U.S. Aggregate Index (``Aggregate Index''), 
Credit Suisse First Boston Liquid U.S. Agency Index, GS $ InvesTop 
5-Year Index (``GS 5-Year Index'') and GS $ InvesTop 10-Year Index 
(``GS 10-Year Index'').
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    4. Except for the TIPS Index and the Aggregate Index, all of the 
Underlying Indices contain fixed-income securities that are eligible 
for inclusion in the underlying indices for the existing series of the 
Trust that are subject to the Prior Order. The TIPS Index represents 
all of the inflation protected public obligations of the United States 
Treasury. The Aggregate Bond Index includes United States agency 
mortgage pass-through securities, in addition to fixed-income 
securities that are included in certain underlying indices for existing 
series of the Trust. The New Fund that would track the Aggregate Index 
(``Aggregate Fund'') intends to use ``to-be-announced'' (``TBA'') 
transactions to track the United States agency mortgage pass-through 
securities in the Aggregate Index.\4\ Applicants state that information 
about the intraday prices for the fixed income securities held by the 
New Funds (and TBAs held by the Aggregate Fund) is readily available to 
the marketplace.
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    \4\ A TBA transaction essentially is a purchase or sale of a 
United States agency mortgage pass-through security for future 
settlement at an agreed upon date. Applicants state that 90% of 
United States agency mortgage pass-through securities are executed 
as TBA trades. Applicants state that TBA transactions increase the 
liquidity and pricing efficiency of transactions in United States 
agency mortgage pass-through securities since they permit similar 
United States agency mortgage pass-through securities to be traded 
interchangeably pursuant to commonly observed settlement and 
delivery requirements.
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    5. The investment objective of each New Fund will be to provide 
investment results that correspond generally to the price and yield 
performance of its relevant Underlying Index. Each New Fund will 
utilize as an investment approach a representative sampling strategy 
where each New Fund will seek to hold a representative sample of the 
component securities of the Underlying Index. Except for the Aggregate 
Fund and the New Funds that track the GS 5-Year Index (``GS 5-Year 
Fund'') and the GS 10-Year Index (``GS 10-Year Fund''), each New Fund 
will invest at least 90% of its assets in the component securities of 
its Underlying Index and may invest the remainder of its assets in 
certain futures, options, and swap contracts, cash and cash 
equivalents, and in bonds not included in its Underlying Index which 
the Adviser believes will help the New Fund track its Underlying Index. 
Each of the GS 5-Year Fund and the GS 10-Year Fund generally will 
invest 90% of its assets in the component securities of its Underlying 
Index, though at times each of those New Funds may invest up to 20% of 
its assets in certain futures, options and swap contracts, cash and 
cash equivalents, as well as in bonds not included in its Underlying 
Index in order to manage prospective changes to the indices.\5\ The 
Aggregate Bond Fund will have at least 90% of its net assets invested 
in: (a) Component securities of its Underlying Index and (b) 
investments that have economic characteristics that are substantially 
identical to the economic characteristics of the component securities 
of its Underlying Index (i.e., the TBAs, as discussed above). 
Applicants expect that each New Fund will have a tracking error 
relative to the performance of its respective Underlying Index of no 
more than 5 percent.
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    \5\ The bonds will be bonds that the Adviser believes will help 
the New Fund track its Underlying Index and which are either: (a) 
included in the broader index upon which such Underlying Index is 
based; or (b) new issues entering or about to enter the Underlying 
Index or the broader index upon which such Underlying Index is 
based.
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    6. Applicants state that all discussions contained in the 
application for the Prior Order are equally applicable to the New 
Funds, except as specifically noted by applicants (as summarized 
above). Applicants agree that the amended order will subject applicants 
to the same conditions as imposed by the Prior Order. Applicants 
believe that the requested relief continues to meet the necessary 
exemptive standards.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-21447 Filed 8-20-03; 8:45 am]
BILLING CODE 8010-01-P