[Federal Register Volume 68, Number 169 (Tuesday, September 2, 2003)]
[Notices]
[Pages 52245-52252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-22234]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48398; File No. SR-Amex-2003-75]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the American Stock Exchange LLC Relating to Eight Series of 
the iShares Trust Based on a Specified Fixed Income Index

August 22, 2003.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on August 20, 2003, the American Stock Exchange LLC (the 
``Amex'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change as described 
in Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list under Rule 1000A the following eight 
additional series of the iShares Trust (``Trust''), each a ``New 
Fund'': (1) iShares Lehman Short U.S. Treasury Bond Fund; (2) iShares 
Lehman 3-7 Year U.S. Treasury Bond Fund; (3) iShares Lehman 10-20 Year 
U.S. Treasury Bond Fund; (4) iShares Lehman U.S. Treasury Inflation 
Protected Securities Fund; (5) iShares Lehman U.S. Credit Bond Fund; 
(6) iShares Lehman Intermediate U.S. Credit Bond Fund; (7) iShares 
Lehman Intermediate U.S. Government/Credit Bond Fund; and (8) iShares 
Lehman U.S. Aggregate Bond Fund.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Amex included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Amex has prepared summaries, set forth in Sections 
A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

Purpose
    Amex Rule 1000A provides standards for listing Index Fund Shares, 
which are securities issued by an open-end management investment 
company (open-end mutual fund) for Exchange trading. These securities 
are registered under the Investment Company Act of 1940 (``1940 Act'') 
as well as the Exchange Act. The Commission previously approved 
amendments to Rule 1000A to accommodate the listing of Index Fund 
Shares based on an index of fixed income securities, and in particular, 
series of the iShares Trust based on indexes of fixed income 
securities.\3\
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    \3\ See Securities Exchange Act Release No. 46252 (July 24, 
2002), 67 FR 49715 (July 31, 2002) (``Previous Approval Order'').
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    The Exchange proposes to list under Rule 1000A the following eight 
additional series of the iShares Trust (``Trust''), each a ``New 
Fund'': (1) iShares Lehman Short U.S. Treasury Bond Fund; (2) iShares 
Lehman 3-7 Year U.S. Treasury Bond Fund; (3) iShares Lehman 10-20 Year 
U.S. Treasury Bond Fund; (4) iShares Lehman U.S. Treasury Inflation 
Protected Securities Fund; (5) iShares Lehman U.S. Credit Bond Fund; 
(6) iShares Lehman Intermediate U.S. Credit Bond Fund; (7) iShares 
Lehman Intermediate U.S. Government/Credit Bond Fund; and (8) iShares 
Lehman U.S. Aggregate Bond Fund.
    Each New Fund will hold certain fixed income securities 
(``Portfolio Securities'') selected to correspond generally to the 
performance of a specified U.S. bond index (each, an ``Underlying 
Index''), as described in Exhibit A to the Rule 19b-4 filing. Each of 
the New Funds intends to qualify as a ``regulated investment company'' 
(a ``RIC'') under the Internal Revenue Code (the ``Code'').
    Barclays Global Fund Advisors (the ``Advisor'' or ``BGFA'') is the 
investment adviser to each New Fund. The Advisor is registered under 
the Investment Advisers Act of 1940 (the ``Advisers Act''). The Advisor 
is a wholly owned subsidiary of Barclays Global Investors, N.A. 
(``BGI''), a national banking association. BGI is an indirect 
subsidiary of Barclays Bank PLC of the United Kingdom.
    SEI Investments Distribution Co. (the ``Distributor''), a 
Pennsylvania corporation and broker-dealer registered under the 
Exchange Act, is the principal underwriter and distributor of Creation 
Unit Aggregations of iShares. The Distributor is not affiliated with 
the Exchange or the Advisor.
    Administrator/Custodian/Fund Accountant/Transfer Agent/Dividend 
Disbursing Agent. The Trust has appointed Investors Bank & Trust Co. 
(``IBT'') to act as administrator (the ``Administrator''), custodian, 
fund accountant, transfer agent, and dividend disbursing agent for each 
of the New Funds. The performance of their duties and obligations will 
be conducted within the provisions of the 1940 Act and the rules 
thereunder. There is no affiliation between IBT and the Trust, the 
Advisor, or the Distributor.
a. Operation of the New Funds
    The investment objective of each New Fund will be to provide 
investment results that correspond generally to the performance of its 
Underlying Index. In seeking to achieve its respective investment 
objective, each New Fund will utilize ``passive'' indexing investment 
strategies. Each New Fund may fully replicate its Underlying Index, but 
currently intends to use a ``representative sampling'' strategy to 
track its Underlying Index. A Fund utilizing a representative sampling 
strategy generally will hold a basket of the component securities 
(``Component Securities'') of its Underlying Index, but it may not hold 
all of the Component Securities of its Underlying Index (as compared to 
a Fund that uses a replication strategy which invests in substantially 
all of the Component Securities in its Underlying Index in the same 
approximate proportions as in the

[[Page 52246]]

Underlying Index).\4\ The representative sampling techniques that will 
be used by the Advisor to manage the New Funds do not differ from the 
representative sampling techniques it uses to manage the Funds that 
were the subject of the Commission's June 25, 2002 order under the 1940 
Act relating to other series of the iShares Trust indexes of fixed 
income securities.\5\
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    \4\ The Trust, Advisor and Distributor (``Applicants'') have 
filed with the Commission an Application for an Amended Order 
(``Application'') under Sections 6(c) and 17(b) of the 1940 Act for 
the purpose of exempting the New Funds of the Trust from various 
provisions of the 1940 Act. (File No. 812-13003). A notice of the 
Application was issued in Investment Company Act Release No. 26151, 
August 15, 2003. The information provided in this Rule 19b-4 filing 
related to the New Funds is based on information included in the 
Application, which includes additional information regarding the 
Trust and the New Funds. The initial Application for additional 
series of the iShares Trust based on indexes of fixed income 
securities (File No 812-12390) is referred to herein as the 
``Original Application.'' The Original Application was approved in 
Investment Company Act Release No. 25622, June 25, 2002 (``Order''). 
See also, the Previous Approval Order, supra note 3, for additional 
information relating to series of the iShares Trust, as described in 
the Original Application.
    \5\ See In the Matter of iShares Trust, et al., Investment 
Company Act Release No. 25622 (June 25, 2002) (relating to the 
iShares 1-3 Year Treasury Index Fund, 7-10 Year Treasury Index Fund, 
20+ Year Treasury Index Fund, Treasury Index Fund, Government/Credit 
Index Fund, Lehman Corporate Bond Fund and GS$ InvesTop Corporate 
Bond Fund).
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    When using a representative sampling strategy, the Advisor attempts 
to match the risk and return characteristics of a New Fund's portfolio 
to the risk and return characteristics of the Underlying Index. As part 
of this process, the Advisor subdivides each Underlying Index into 
smaller, more homogeneous pieces. These subdivisions are sometimes 
referred to as ``cells.'' A cell will contain securities with similar 
characteristics. For fixed income indices, the Advisor generally 
divides the index according to the five parameters that determine a 
bond's risk and expected return: (1) Duration, (2) sector, (3) credit 
rating, (4) coupon, and (5) the presence of embedded options. When 
completed, all bonds in the index will have been assigned a cell. The 
Advisor then begins to construct the portfolio by selecting 
representative bonds from these cells. The representative sample of 
bonds chosen from each cell is designed to closely correlate to the 
duration, sector, credit rating, coupon, and embedded option 
characteristics of each cell. The characteristics of each cell when 
combined are, in turn, designed to closely correlate to the duration, 
sector, credit rating, coupon, and embedded option characteristics of 
the Underlying Index as a whole. The Advisor may exclude less liquid 
bonds in order to create a more tradable portfolio and improve 
arbitrage opportunities.
    According to the Original Application, the representative sampling 
techniques used by the Advisor to manage fixed income funds do not 
materially differ from the representative sampling techniques it uses 
to manage equity funds. Due to the differences between bonds and 
equities, the Advisor analyzes different information--such as dividend 
payments instead of coupon rates, for example.
    According to the Original Application, the New Funds' use of the 
representative sampling strategy is beneficial for a number of reasons. 
First, the Advisor can avoid bonds that are ``expensive names'' (i.e., 
bonds that trade at perceived higher prices or lower yields because 
they are in short supply) but have the same essential risk, value, 
duration and other characteristics as less expensive names. Second, the 
use of representative sampling techniques permits the Advisor to 
exclude bonds that it believes will soon be deleted from the Underlying 
Index. Third, the Advisor can avoid holding bonds it deems less liquid 
than other bonds with similar characteristics. Fourth, the Advisor can 
develop a basket that is easier to construct and cheaper to trade, 
thereby potentially improving arbitrage opportunities.
    From time to time, adjustments may be made in the portfolio of each 
New Fund in accordance with changes in the composition of the 
Underlying Index or to maintain RIC compliance. For example, if at the 
end of a calendar quarter a New Fund would not comply with the RIC 
diversification tests, the Advisor would make adjustments to the 
portfolio to ensure continued RIC status. The Exchange represents that 
the Advisor expects that each New Fund will have a tracking error 
relative to the performance of its respective Underlying Index of no 
more than five percent (5%).\6\ Each New Fund's investment objectives, 
policies and investment strategies will be fully disclosed in its 
Prospectus and Statement of Additional Information. Each New Fund 
(except the iShares Lehman U.S. Aggregate Bond Fund) will invest at 
least 90% of its assets in Component Securities of its respective 
Underlying Index. Each of these New Funds may also invest up to 10% of 
its assets in bonds not included in its Underlying Index, but which the 
Advisor believes will help the New Fund track its Underlying Index, as 
well as in certain futures, options and swap contracts, cash and cash 
equivalents. For example, these New Funds may invest in securities not 
included in the relevant Underlying Index in order to reflect 
prospective changes in the relevant Underlying Index (such as future 
corporate actions and index reconstitutions, additions and deletions).
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    \6\ Telephone call among Mike Cavalier, Associate General 
Counsel, Amex; Marc McKayle, Special Counsel, Division of Market 
Regulation (``Division''), Commission; and Jennifer Lewis, Special 
Counsel, Division, Commission, on August 20, 2003.
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    According to the Application, with respect to the iShares Lehman 
U.S. Aggregate Bond Fund (the ``Lehman Aggregate Fund''), additional 
portfolio flexibility would benefit the Fund, while at the same time 
permitting it to closely track the performance of its Underlying Index. 
The Lehman Aggregate Fund will: (i) seek to track the performance of 
that portion of its Underlying Index comprised of U.S. Treasury 
securities, U.S. agency securities, corporate bonds, non-corporate 
bonds (e.g., bonds issued by supra-national entities such as the 
International Monetary Fund), asset-backed securities, and commercial 
mortgage-backed securities (approximately 65% of the Underlying Index 
as of April 30, 2003) by investing a corresponding percentage of its 
net assets (i.e., approximately 65%) in the Component Securities of its 
Underlying Index; \7\ and (ii) seek to track the performance of that 
portion of its Underlying Index invested in U.S. agency mortgage pass-
through securities (approximately 35% of the Underlying Index as of 
April 30, 2003) by investing a corresponding percentage of its net 
assets (i.e., approximately 35%) through TBA transactions (as defined 
below) on U.S. agency mortgage pass-through securities. Through the 
Lehman Aggregate Fund's direct investments in Component Securities of 
its Underlying Index and its investments in mortgage pass-through 
securities through TBA transactions as described above, the Lehman 
Aggregate Fund will have at least 90% of its net assets invested (i) in 
Component Securities of its Underlying Index and (ii) in investments 
that have economic characteristics that are substantially identical to 
the economic characteristics of the Component

[[Page 52247]]

Securities of its Underlying Index (i.e., TBA transactions).
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    \7\ With respect to this portion of its portfolio, the Lehman 
Aggregate Fund may invest up to 10% of its portfolio in bonds not 
included in its Underlying Index, but which the Adviser believes 
will help the Lehman Aggregate Fund track its Underlying Index, as 
well as in certain futures, options and swap contracts, cash and 
cash equivalents.
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    According to the Application, the Lehman Aggregate Fund needs the 
investment flexibility to engage in TBA transactions as described above 
primarily because approximately 35% of the securities in the Lehman 
Aggregate Fund's Underlying Index are expected to be pools of U.S. 
agency mortgage pass-through securities.\8\ As discussed below, it is 
easier to trade and obtain intra-day prices of TBAs than it is to trade 
and obtain intra-day prices of specific pools of mortgage pass-through 
securities. The readily available information about intra-day pricing 
of TBAs and the ease with which they can be traded should make it 
easier to create and redeem Creation Unit Aggregations and help 
maintain the efficiency of the Fund's arbitrage mechanism.
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    \8\ As used herein, the term ``U.S. agency mortgage pass-through 
security'' or ``mortgage pass-through security'' refers to a 
category of pass-through securities backed by pools of mortgages and 
issued by one of several U.S. Government-sponsored enterprises: the 
Government National Mortgage Association (``GNMA''), Federal 
National Mortgage Association (``FNMA'') or Federal Home Loan 
Mortgage Corporation (``FHLMC''). In the basic pass-through 
structure, mortgages with similar issuer, term and coupon 
characteristics are collected and aggregated into a pool. The pool 
is assigned a CUSIP number and undivided interests in the pool are 
traded and sold as pass-through securities. The holder of the 
security is entitled to a pro rata share of principal and interest 
payments (including unscheduled prepayments) from the pool of 
mortgage loans. The portion of the Lehman U.S. Aggregate Index 
representing the mortgage pass-through segment of the U.S. 
investment grade bond market is comprised of multiple pools of 
mortgage pass-through securities.
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    The Application states that, although the market for mortgage pass-
through securities is extremely deep and liquid, it is impractical to 
trade mortgage pass-through securities on a pool-by-pool basis, 
particularly when large dollar amounts are involved. For this reason, 
the vast majority of mortgage pools are traded using ``to-be-
announced'' or ``TBA transactions.'' A ``TBA transaction'' essentially 
is a purchase or sale of a pass-through security for future settlement 
at an agreed upon date.\9\ It has been estimated that 90% of mortgage 
pass-through securities (as measured by total dollar volume) are 
executed as TBA trades.\10\ TBA transactions increase the liquidity and 
pricing efficiency of transactions in mortgage pass-through securities 
since they permit similar mortgage pass-through securities to be traded 
interchangeably pursuant to commonly observed settlement and delivery 
requirements.
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    \9\ ``TBA'' refers to a mechanism for the forward settlement of 
agency mortgage pass-through securities, and not to a separate type 
of mortgage-backed security. TBA trades generally are conducted in 
accordance with widely-accepted ``Good Delivery'' guidelines 
published by The Bond Market Association. The Good Delivery 
guidelines facilitate transactions in mortgage pass-through 
securities by establishing commonly observed terms and conditions 
for execution, settlement and delivery. In a TBA trade, the buyer 
and seller decide on general trade parameters, such as agency, 
coupon, term to maturity, settlement date, par amount, and price. 
The actual pools delivered are determined two days prior to 
settlement date. TBA transactions promote efficient pricing because 
the Good Delivery guidelines permit only a small variance between 
the face amount of the pools actually delivered and the nominal 
agreed upon amount. Intra-day and end-of-day pricing of TBAs is 
available from multiple pricing sources, such as Bloomberg and 
Tradeweb. The Bond Market Association publishes standard 
notification and settlement dates for TBA trades specifying uniform 
settlement dates for specific classes of securities. The most active 
trading market for TBA trades is usually for next-month settlement. 
See generally TBAs: To-Be-Announced Mortgage Securities 
Transactions, The Bond Market Association (1999).
    \10\ Id. at 3.
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    The Lehman Aggregate Fund intends to use TBA transactions to 
acquire and maintain exposure to that portion of the Lehman U.S. 
Aggregate Index comprised of pools of mortgage pass-through securities 
in either of two ways. First, and more commonly, the Lehman Aggregate 
Fund will enter into TBA agreements and ``roll over'' such agreements 
prior to the settlement date stipulated in such agreements. This type 
of TBA transaction is commonly known as a ``TBA roll.'' In a ``TBA 
roll'' the Lehman Aggregate Fund generally will sell the obligation to 
purchase the pools stipulated in the TBA agreement prior to the 
stipulated settlement date and will enter into a new TBA agreement for 
future delivery of pools of mortgage pass-through securities. Second, 
and less frequently, the Lehman Aggregate Fund will enter into TBA 
agreements and settle such transactions on the stipulated settlement 
date by actual receipt or delivery of the pools of mortgage pass-
through securities stipulated in the TBA agreement. Since intra-day 
prices of TBA agreements are more readily available than intra-day 
prices on specific mortgage pools and because mortgage pools tend to be 
less liquid than TBA agreements, the use of TBA agreements should help 
maintain the efficiency of the Fund's arbitrage mechanism. The Lehman 
Aggregate Fund will accept actual delivery of mortgage pools only when 
the Adviser believes it is in the best interests of the Lehman 
Aggregate Fund and its shareholders to do so. In determining whether to 
accept actual delivery of mortgage pools, the Adviser will consider, 
among other things, the potential impact of such acceptance on the 
efficiency of the Lehman Aggregate Fund's arbitrage mechanism and the 
Lehman Aggregate Fund's ability to track its Underlying Index. For 
these reasons, the Adviser believes that the ability to invest a 
significant portion of the Lehman Aggregate Fund's assets through TBA 
transactions and to maintain such exposure through the use of TBA rolls 
would increase the liquidity and pricing efficiency of the Lehman 
Aggregate Fund's portfolio. In addition, since holding a TBA position 
exposes the holder to substantially identical market and economic risks 
as holding a position in a corresponding pool of mortgage pass-through 
securities, the Adviser believes that the use of TBA transactions as 
described herein should permit the Lehman Aggregate Fund to closely 
track the performance of its Underlying Index.
    The use of TBA transactions is not intended to help the Lehman 
Aggregate Fund outperform its Underlying Index, but rather to increase 
pricing efficiency while at the same time maintaining the Lehman 
Aggregate Fund's exposure to its Underlying Index.\11\
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    \11\ Telephone call between Mike Cavalier, Associate General 
Counsel, Amex; and Florence Harmon, Senior Special Counsel, 
Division, Commission, on August 22, 2003.
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b. Issuance of Creation Unit Aggregations
    The issuance of Creation Unit Aggregations will operate, except as 
noted below, in a manner identical to that of the Funds described in 
the Previous Approval Order, and in the Original Application. The only 
difference between the creation process for the New Funds and that of 
the Funds that are the subject of the Order involves the Lehman 
Aggregate Fund (discussed below).
    1. In General. Shares of each New Fund (the ``iShares'') will be 
issued on a continuous offering basis in groups of 50,000 or more. 
These ``groups'' of shares are called ``Creation Unit Aggregations.'' 
The New Funds will issue and redeem iShares only in Creation Unit 
Aggregations.\12\ As with other open-end investment companies, iShares 
will be issued at the net asset value (``NAV'') per share next 
determined after an order in proper form is received. The anticipated 
price at which the iShares will initially trade is approximately $100.
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    \12\ Generally, each Creation Unit Aggregation will consist of 
50,000 or more iShares and the estimated initial value per Creation 
Unit Aggregation will be approximately $5 million.
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    The NAV per share of each New Fund is determined as of the close of 
the regular trading session on the Amex on each day that the Amex is 
open. The Trust sells Creation Unit Aggregations of

[[Page 52248]]

each New Fund only on business days at the next determined NAV of each 
New Fund.
    Creation Unit Aggregations will be issued by each Fund in exchange 
for the in-kind deposit of a portfolio securities designated by the 
Advisor to correspond generally to the price and yield performance of 
the New Fund's Underlying Index (the ``Deposit Securities''). 
Purchasers will generally be required to deposit a specified cash 
payment in the manner more fully described in the Application. Creation 
Unit Aggregations will be redeemed by each New Fund in exchange for 
portfolio securities of the New Fund (``Fund Securities'') and a 
specified cash payment in the manner more fully described herein. Fund 
Securities received on redemption may not be identical to Deposit 
Securities deposited in connection with creations of Creation Unit 
Aggregations for the same day.
    The Distributor will act on an agency basis and will be the Trust's 
principal underwriter for the iShares in Creation Unit Aggregations of 
each New Fund. All orders to purchase iShares in Creation Unit 
Aggregations must be placed with the Distributor by or through an 
authorized participant (``Authorized Participant''). Authorized 
Participants, which are required to be Depository Trust Company 
(``DTC'') participants, must enter into a participant agreement with 
the Distributor. The Distributor will transmit such orders to the 
applicable New Fund and furnish to those placing orders confirmation 
that the orders have been accepted. The Distributor may reject any 
order that is not submitted in proper form. The Distributor will be 
responsible for delivering the prospectus to those persons creating 
iShares in Creation Unit Aggregations and for maintaining records of 
both the orders placed with it and the confirmations of acceptance 
furnished by it. In addition, the Distributor will maintain a record of 
the instructions given to the Trust to implement the delivery of 
iShares.
    2. In-Kind Deposit of Portfolio Securities. Payment for Creation 
Unit Aggregations placed through the Distributor will be made by the 
purchasers generally by an in-kind deposit with the New Fund of the 
Deposit Securities together with an amount of cash (the ``Balancing 
Amount'') specified by the Advisor in the manner described below. The 
Balancing Amount is an amount equal to the difference between (1) the 
NAV (per Creation Unit Aggregation) of the New Fund and (2) the total 
aggregate market value (per Creation Unit Aggregation) of the Deposit 
Securities (such value referred to herein as the ``Deposit Amount''). 
The Balancing Amount serves the function of compensating for 
differences, if any, between the NAV per Creation Unit Aggregation and 
that of the Deposit Amount. The deposit of the requisite Deposit 
Securities and the Balancing Amount are collectively referred to herein 
as a ``Portfolio Deposit.''
    The Advisor will make available to the market through the National 
Securities Clearing Corporation (the ``NSCC'') on each Business Day, 
prior to the opening of trading on the Amex (currently 9:30 a.m. 
eastern time), the list of the names and the required number of shares 
of each Deposit Security included in the current Portfolio Deposit 
(based on information at the end of the previous Business Day) for the 
relevant New Fund. The Portfolio Deposit will be applicable to a New 
Fund (subject to any adjustments to the Balancing Amount, as described 
below) in order to effect purchases of Creation Unit Aggregations of 
the New Fund until such time as the next-announced Portfolio Deposit 
composition is made available.
    The identity and number of shares of the Deposit Securities 
required for the Portfolio Deposit for each New Fund will change from 
time to time. The composition of the Deposit Securities may change in 
response to adjustments to the weighting or composition of the 
Component Securities in the relevant Underlying Index. These 
adjustments will reflect changes, known to the Advisor to be in effect 
by the time of determination of the Deposit Securities, in the 
composition of the Underlying Index being tracked by the relevant New 
Fund, or resulting from rebalance or additions or deletions to the 
relevant Underlying Index. In addition, the Trust reserves the right 
with respect to each New Fund to permit or require the substitution of 
an amount of cash (i.e., a ``cash in lieu'' amount) to be added to the 
Balancing Amount to replace any Deposit Security: (1) that may be 
unavailable or not available in sufficient quantity for delivery to the 
Trust upon the purchase of iShares in Creation Unit Aggregations, or 
(2) that may not be eligible for trading by an Authorized Participant 
or the investor on whose behalf the Authorized Participant is acting.
    The Lehman Aggregate Fund may invest in and hold mortgage pass-
through securities on a TBA basis. Since a TBA transaction is 
essentially an agreement for future settlement of a mortgage security, 
it is not possible to accept TBAs as part of the Portfolio Deposit. 
Instead, the Fund will designate the mortgage pass-through TBAs to be 
included in a Portfolio Deposit just as it would any other Deposit 
Securities of a Portfolio Deposit, and will accept ``cash in lieu'' of 
delivery of the designated mortgage pass-through TBAs. The Lehman 
Aggregate Fund will then enter into TBA agreements included as Deposit 
Securities in the Portfolio Deposit.\13\ According to the Application, 
this will substantially minimize the Lehman Aggregate Fund's 
transaction costs, enhance operational efficiencies and otherwise 
reduce any operational issues which the acceptance of pools of mortgage 
pass-through securities might otherwise present.\14\
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    \13\ Prior to settlement of such TBA transactions, the ``cash in 
lieu'' portion of the Portfolio Deposit will be invested in cash 
equivalents, including money market mutual funds, and such 
investments, along with cash and other liquid assets identified by 
BGFA, will be segregated on the books and records of the Fund or its 
Custodian in accordance with section 18 of the 1940 Act and 
Investment Company Act Release 10666. Since the price of a TBA 
transaction includes an assumed rate of return on the cash held in 
anticipation of settlement, the Fund's investment in cash 
equivalents prior to settlement is not expected to have a material 
impact on potential tracking error or the Fund's ability to track 
its Underlying Index. In addition, since the interest or dividends 
that the Fund accrues on a daily basis on its investment in cash 
equivalents will be relatively small and will be included as part of 
the Cash Component published on a daily basis according to the 
procedures currently used for the Index Funds, Applicants expect 
that such dividends and interest will be reflected in the secondary 
market trading price of iShares of the Fund. The Commission's June 
25, 2002 order relating to fixed income funds of the iShares Trust 
(Investment Company Act Release No. 45622) permits acceptance of a 
``cash-in lieu'' amount to replace Deposit Securities that are 
unavailable for delivery or for other reasons. In addition, prior 
iShares orders expressly permit ``cash-only purchases of Creation 
Unit Aggregations'' where the Adviser believes such transactions 
would ``substantially minimize * * * transactional costs or would 
enhance * * * operational efficiencies.'' See Investment Company Act 
Release No. 24452 (May 12, 2000).
    \14\ Intra-day and end-of-day pricing of TBAs is available from 
multiple pricing sources, such as Bloomberg and Tradeweb. In 
addition, the fungible nature of TBAs and commonly observed 
execution and settlement procedures create significant pricing 
efficiencies and market liquidity for TBAs. TBAs typically trade at 
very narrow spreads on transactions of up to $300 million or more. 
Since intra-day pricing of TBAs is readily available and the market 
for mortgage pass-through TBAs is extremely liquid, the designation 
of TBAs in the Portfolio Deposit and their inclusion as Fund 
Securities should make pricing of the Fund and the Deposit Amount 
more efficient and transparent, thus increasing arbitrage 
efficiency.
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c. Availability of Information Regarding iShares and Underlying Indices
    On each Business Day, the list of names and amount of each treasury 
security, government security or corporate bond constituting the 
current Deposit Securities of the Portfolio

[[Page 52249]]

Deposit and the Balancing Amount effective as of the previous Business 
Day will be made available. An amount per iShare representing the sum 
of the estimated Balancing Amount effective through and including the 
previous Business Day, plus the current value of the Deposit 
Securities, on a per iShare basis (the ``Intra-day Optimized Portfolio 
Value'' or ``IOPV'') will be calculated by an independent third party 
(such as Bloomberg L.P.) (``Bloomberg'') every 15 seconds during the 
AMEX's regular trading hours and disseminated every 15 seconds by such 
third party and by AMEX on AMEX's Consolidated Tape B. The IOPV will be 
updated throughout the day to reflect changing bond prices, as well as 
TBA prices, using multiple prices from independent third party pricing 
sources. Information about the intra-day prices for the Deposit 
Securities of each Fund is readily available to the marketplace.\15\ 
Applicants represent (i) that IOPV will be calculated by an independent 
third party; (ii) that IOPV will be calculated using prices obtained 
from multiple independent third-party pricing sources (such as broker-
dealers) throughout the day; and (iii) that IOPV will be calculated in 
accordance with pre-determined criteria and set parameters so that an 
individual bond ``price'' based on an analysis of multiple pricing 
sources is obtained for each security in a Portfolio Deposit.\16\ 
Closing prices of the New Funds' Deposit Securities are readily 
available from published or other public sources, such as the Trace 
Reporting and Compliance Engine (commonly known as ``TRACE''), or on-
line client-based information services provided by Credit Suisse First 
Boston, Goldman Sachs, Lehman Brothers, Merrill Lynch, IDC, Bridge, 
Bloomberg, Tradeweb, and other pricing services commonly used by bond 
mutual funds.\17\
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    \15\ Authorized Participants and other market participants have 
a variety of ways to access the intra-day security prices that form 
the basis of the Fund's IOPV calculation. For example, intra-day 
prices for treasury securities, agency securities and TBAs are 
available from Bloomberg, the Trace Reporting and Compliance Engine 
(commonly known as ``TRACE'') and TradeWeb. Intra-day prices for 
inflation protected public obligations of the U.S. Treasury 
(``TIPS'') are available from Bloomberg and Tradeweb. Intra-day 
prices of callable agency securities are expected to be available 
from TradeWeb in July or sometime shortly thereafter. Intra-day 
prices of corporate bonds are available from TRACE. In addition, 
intra-day prices for each of these securities are available by 
subscription or otherwise to Authorized Participants and clients of 
major U.S. broker-dealers (such as Credit Suisse First Boston, 
Goldman Sachs and Lehman Brothers).
    \16\ For example, Bloomberg Generic Prices could be used. 
Bloomberg Generic Prices are current prices on individual bonds as 
determined by Bloomberg using a proprietary automated pricing 
program that analyzes multiple bond prices contributed to Bloomberg 
by third-party price contributors (such as broker-dealers).
    \17\ Applicants understand that Credit Suisse First Boston, 
Goldman Sachs, Lehman Brothers, Merrill Lynch, IDC, Bridge, and 
Bloomberg provide prices for each type of Deposit Security. Tradeweb 
provides prices for each type of Deposit Security except mortgage 
backed securities and corporate bonds. TRACE provides prices for 
corporate bonds.
---------------------------------------------------------------------------

    The Lehman Indices will not be calculated or disseminated intra-
day. The value and return of each Lehman Index is calculated and 
disseminated each business day, at the end of the day, by Lehman 
Brothers.
    Each New Fund will make available through NSCC on a daily basis the 
names and required number of shares of each of the Deposit Securities 
in a Creation Unit Aggregation, as well as information regarding the 
Balancing Amount. The NAV for each New Fund will be calculated and 
disseminated daily. The Amex also intends to disseminate a variety of 
data with respect to each New Fund on a daily basis by means of CTA and 
CQ High Speed Lines; information with respect to recent NAV, shares 
outstanding, estimated cash amount and total cash amount per Creation 
Unit Aggregation will be made available prior to the opening of the 
Amex. In addition, the Web site for the Trust, which will be publicly 
accessible at no charge, will contain the following information, on a 
per iShare basis, for each New Fund: (a) the prior Business Day's NAV 
and the mid-point of the bid-ask price \18\ at the time of calculation 
of such NAV (``Bid/Ask Price''), and a calculation of the premium or 
discount of such price against such NAV; and (b) data in chart format 
displaying the frequency distribution of discounts and premiums of the 
Bid/Ask Price against the NAV, within appropriate ranges, for each of 
the four previous calendar quarters.\19\
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    \18\ The Bid-Ask Price of a New Fund is determined using the 
highest bid and lowest offer on the Exchange as of the time of 
calculation of each New Fund's NAV.
    \19\ The secondary market for Treasury securities is a highly 
organized over-the-counter market. Many dealers, and particularly 
the primary dealers, make markets in Treasury securities. Trading 
activity takes place between primary dealers, non-primary dealers, 
and customers of these dealers, including financial institutions, 
non-financial institutions and individuals. Increasingly, trading in 
Treasury securities occurs through automated trading systems.
    The primary dealers are among the most active participants in 
the secondary market for Treasury securities. The primary dealers 
and other large market participants frequently trade with each 
other, and most of these transactions occur through an interdealer 
broker. The interdealer brokers provide primary dealers and other 
large participants in the Treasury market with electronic screens 
that display the bid and offer prices among dealers and allow trades 
to be consummated.
    Quote and trade information regarding Treasury securities is 
widely available to market participants from a variety of sources. 
The electronic trade and quote systems of the dealers and 
interdealer brokers are one such source. Groups of dealers and 
interdealer brokers also furnish trade and quote information to 
vendors such as Bloomberg, Reuters, Bridge, Moneyline Telerate, and 
CQG. GovPX, for example, is a consortium of leading government 
securities dealers and subscribers that provides market data from 
leading government securities dealers and interdealer brokers to 
market data vendors and subscribers. Trade Web, another example, is 
a consortium of 18 primary dealers that, in addition to providing a 
trading platform, also provides market data direct to subscribers or 
to other market data vendors.
    Real-time price quotes for corporate and non-corporate debt 
securities are available to institutional investors via proprietary 
systems such as Bloomberg, Reuters and Dow Jones Telerate. 
Additional analytical data and pricing information may also be 
obtained through vendors such as Bridge Information Systems, Muller 
Data, Capital Management Sciences, Interactive Data Corporation and 
Barra.
    Retail investors have access to free intra-day bellwether 
quotes. The Bond Market Association provides links to price and 
other bond information sources on its investor Web site at 
www.investinginbonds.com. In addition, the transaction prices and 
volume data for the most actively-traded bonds on the exchanges are 
published daily in newspapers and on a variety of financial Web 
sites.
    Closing corporate and non-corporate bond prices are also 
available through subscription services (e.g., IDC, Bridge) that 
provide aggregate pricing information based on prices from several 
dealers, as well as subscription services from broker-dealers with a 
large bond trading operation, such as Lehman Brothers and Goldman, 
Sachs & Co.
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d. Redemption of iShares
    Creation Unit Aggregations of each New Fund will be redeemable at 
the NAV next determined after receipt of a request for redemption. 
Creation Unit Aggregations of each New Fund will be redeemed 
principally in-kind, together with a balancing cash payment (although, 
as described below, Creation Unit Aggregations may sometimes be 
redeemed for cash). The value of each New Fund's redemption payments on 
a Creation Unit Aggregation basis will equal the NAV per the 
appropriate number of iShares of such New Fund. Owners of iShares may 
sell their iShares in the secondary market, but must accumulate enough 
iShares to constitute a Creation Unit Aggregation in order to redeem 
through the New Fund. Redemption orders must be placed by or through an 
Authorized Participant.
    Creation Unit Aggregations of any New Fund generally will be 
redeemable on any Business Day in exchange for Fund Securities and the 
Cash Redemption Payment (defined below) in effect on the date a request 
for redemption is made. The Advisor will publish daily through NSCC the 
list of securities which a creator of Creation Unit Aggregations must 
deliver to the Fund (the ``Creation List'') and which a

[[Page 52250]]

redeemer will receive from the New Fund (the ``Redemption List''). The 
Creation List is identical to the list of the names and the required 
numbers of shares of each Deposit Security included in the current 
Portfolio Deposit.\20\
---------------------------------------------------------------------------

    \20\ Investors redeeming Creation Unit Aggregations of the 
Lehman Aggregate Fund will receive cash for any Portfolio Securities 
that are mortgage pass-through TBAs.
---------------------------------------------------------------------------

    In addition, just as the Balancing Amount is delivered by the 
purchaser of Creation Unit Aggregations to the New Fund, the Trust will 
also deliver to the redeeming Beneficial Owner in cash the ``Cash 
Redemption Payment.'' The Cash Redemption Payment on any given Business 
Day will be an amount calculated in the same manner as that for the 
Balancing Amount, although the actual amounts may differ if the Fund 
Securities received upon redemption are not identical to the Deposit 
Securities applicable for creations on the same day. To the extent that 
the Fund Securities have a value greater than the NAV of iShares being 
redeemed, a cash payment equal to the differential is required to be 
paid by the redeeming Beneficial Owner to the New Fund. The Trust may 
also make redemptions in cash in lieu of transferring one or more Fund 
Securities to a redeemer if the Trust determines, in its discretion, 
that such method is warranted due to unusual circumstances. An unusual 
circumstance could arise, for example, when a redeeming entity is 
restrained by regulation or policy from transacting in certain Fund 
Securities, such as the presence of such Fund Securities, on a 
redeeming investment banking firm's restricted list.
e. Clearance and Settlement
    The Deposit Securities and Fund Securities of each New Fund will 
settle via free delivery through the Federal Reserve System for U.S. 
Government securities and the DTC for corporate securities and non-
corporate securities (other than U.S. Government securities). The 
iShares will settle through the DTC. The Custodian will monitor the 
movement of the Deposit Securities and will instruct the movement of 
the iShares only upon validation that the Deposit Securities have 
settled correctly or that required collateral is in place.
    As with the settlement of domestic ETF transactions outside of the 
NSCC Continuous Net Settlement System (the ``CNS System''), (i) iShares 
of the New Funds and corporate and non-corporate securities (other than 
U.S. government securities) will clear and settle through DTC, and (ii) 
U.S. government securities and cash will clear and settle through the 
Federal Reserve system. More specifically, creation transactions will 
settle as follows. On settlement date (T + 3) an Authorized Participant 
will transfer Deposit Securities that are corporate and non-corporate 
bonds (other than U.S. government securities) through DTC to a DTC 
account maintained by the New Funds' Custodian, and Deposit Securities 
that are U.S. government securities, together with any Balancing 
Amount, to the Custodian through the Federal Reserve system. Once the 
Custodian has verified the receipt of all of the Deposit Securities (or 
in the case of failed delivery of one or more bonds, collateral in the 
amount of 105% or more of the missing Deposit Securities) and the 
receipt of any Balancing Amount, the Custodian will notify the 
Distributor and the Advisor. The Fund will issue Creation Unit 
Aggregations of iShares and the Custodian will deliver the iShares to 
the Authorized Participant through DTC. DTC will then credit the 
Authorized Participant's DTC account. The clearance and settlement of 
redemption transactions essentially reverses the process described 
above. After the Trust has received a redemption request in proper form 
and the Authorized Participant transfers Creation Unit Aggregations of 
iShares to the New Funds' Custodian through DTC, the Trust will cause 
the Custodian to initiate procedures to transfer the requisite Fund 
Securities and any Cash Redemption Payment. On T + 3, assuming the 
Custodian has verified receipt of the Creation Unit Aggregations, the 
Custodian will transfer Fund Securities that are corporate and non-
corporate bonds to the Authorized Participant through DTC and Fund 
Securities that are U.S. Government securities, together with any Cash 
Redemption Payment, through the Federal Reserve system.
    iShares of the New Funds will be debited or credited by the 
Custodian directly to the DTC accounts of the Authorized Participants. 
With respect to domestic equity-based ETFs using the CNS System, 
Creation Unit Aggregations of iShares are deposited or charged to the 
Authorized Participants' DTC accounts through the CNS System. Since 
creation/redemption transactions for iShares of the New Funds will not 
clear and settle through the CNS System, the failed delivery of one or 
more Deposit Securities (on a create) or one or more Fund Securities 
(on a redemption) will not be facilitated by the CNS System. Therefore, 
Authorized Participants will be required to provide collateral to cover 
the failed delivery of Deposit Securities in connection with an ``in-
kind'' creation of iShares. In case of a failed delivery of one or more 
Deposit Securities, the New Funds will hold the collateral until the 
delivery of such Deposit Security. The New Funds will be protected from 
failure to receive the Deposit Securities because the Custodian will 
not effect the Fund's side of the transaction (the issuance of iShares) 
until the Custodian has received confirmation of receipt of the 
Authorized Participant's incoming Deposit Securities (or collateral for 
failed Deposit Securities) and Balancing Amount. In the case of 
redemption transactions, the New Funds will be protected from failure 
to receive Creation Unit Aggregations of iShares because the Custodian 
will not new effect the New Fund's side of the transaction (the 
delivery of Fund Securities and the Cash Redemption Payment) until the 
Transfer Agent has received confirmation of receipt of the Authorized 
Participant's incoming Creation Unit Aggregations. In order to simplify 
the transfer agency process and align the settlement of iShares of the 
New Funds with the settlement of the Deposit Securities and Fund 
Securities, Applicants plan to settle transactions in U.S. Government 
securities, corporate bonds, non-corporate bonds and iShares on the 
same T + 3 settlement cycle. Amex represents that according to the 
Application, the clearance and settlement process will not affect the 
arbitrage of Shares in the New Fund.\21\
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    \21\ Telephone call among Mike Cavalier, Associate General 
Counsel, Amex; Marc McKayle, Special Counsel, Division, Commission; 
and Jennifer Lewis, Special Counsel, Division, Commission, on August 
20, 2003.
---------------------------------------------------------------------------

f. Dividends and Distributions
    Dividends from net investment income will be declared and paid to 
Beneficial Owners of record at least annually by each New Fund. Certain 
of the New Funds may pay dividends, if any, on a quarterly or more 
frequent basis. Distributions of realized securities gains, if any, 
generally will be declared and paid once a year, but each New Fund may 
make distributions on a more frequent basis to comply with the 
distribution requirements of the Internal Revenue Code and consistent 
with the 1940 Act.
    Dividends and other distributions on iShares of each New Fund will 
be distributed on a pro rata basis to Beneficial Owners of such 
iShares. Dividend payments will be made through the Depository and the 
DTC Participants to Beneficial Owners then

[[Page 52251]]

of record with amounts received from each New Fund.
    The Trust will not make the DTC book-entry Dividend Reinvestment 
Service (the ``Service'') available for use by Beneficial Owners for 
reinvestment of their cash proceeds, but certain individual brokers may 
make the Service available to their clients. The SAI will inform 
investors of this fact and direct interested investors to contact such 
investor's broker to ascertain the availability and a description of 
the Service through such broker. The SAI will also caution interested 
Beneficial Owners that they should note that each broker may require 
investors to adhere to specific procedures and timetables in order to 
participate in the Service and such investors should ascertain from 
their broker such necessary details. iShares acquired pursuant to the 
Service will be held by the Beneficial Owners in the same manner, and 
subject to the same terms and conditions, as for original ownership of 
iShares.
g. Other Issues
    1. Criteria for Initial and Continued Listing. iShares are subject 
to the criteria for initial and continued listing of Index Fund Shares 
in Rule 1002A. It is anticipated that a minimum of two Creation Units 
(100,000 iShares) will be required to be outstanding at the start of 
trading. This minimum number of iShares required to be outstanding at 
the start of trading will be comparable to requirements that have been 
applied to previously listed series of Portfolio Depositary Receipts 
and Index Fund Shares.
    The Exchange believes that the proposed minimum number of iShares 
outstanding at the start of trading is sufficient to provide market 
liquidity and to further the Trust's objective to seek to provide 
investment results that correspond generally to the price and yield 
performance of the Index.
    2. Original and Annual Listing Fees. The Amex original listing fee 
applicable to the listing of the New Funds is $5,000 for each Fund. In 
addition, the annual listing fee applicable to the Funds under Section 
141 of the Amex Company Guide will be based upon the year-end aggregate 
number of outstanding iShares in all funds of the Trust listed on the 
Exchange.
    3. Stop and Stop Limit Orders. Amex Rule 154, Commentary .04(c) 
provides that stop and stop limit orders to buy or sell a security 
(other than an option, which is covered by Amex Rule 950(f) and 
Commentary thereto) the price of which is derivatively priced based 
upon another security or index of securities, may with the prior 
approval of a Floor Official, be elected by a quotation, as set forth 
in Commentary .04(c) (i-v). The Exchange has designated Index Fund 
Shares, including iShares, as eligible for this treatment. See Release 
No. 34-29063, note 9, (SR-Amex-90-31) regarding Exchange designation of 
equity derivative securities as eligible for such treatment under Amex 
Rule 154, Commentary .04(c).
    4. Rule 190. Rule 190, Commentary .04 applies to Index Fund Shares 
listed on the Exchange, including iShares. Commentary .04 states that 
nothing in Rule 190(a) should be construed to restrict a specialist 
registered in a security issued by an investment company from 
purchasing and redeeming the listed security, or securities that can be 
subdivided or converted into the listed security, from the issuer as 
appropriate to facilitate the maintenance of a fair and orderly market.
    5. Prospectus Delivery. The Exchange, in an Information Circular to 
Exchange members and member organizations, will inform members and 
member organizations, prior to commencement of trading, of the 
prospectus or Product Description delivery requirements applicable to 
iShares. The Applicants have filed with the Division of Investment 
Management a separate request for an exemptive order granting relief 
from certain prospectus delivery requirements under section 24(d) of 
the 1940 Act. (Investment Company Act Release No. 25595, May 29, 2002). 
Any product description used in reliance on a Section 24(d) exemptive 
order will comply with all representations made therein and all 
conditions thereto.
    6. Trading Halts. In addition to other factors that may be 
relevant, the Exchange may consider factors such as those set forth in 
Rule 918C(b) in exercising its discretion to halt or suspend trading in 
Index Fund Shares, including iShares. These factors would include, but 
are not limited to, (1) the extent to which trading is not occurring in 
securities underlying the index; or (2) whether other unusual 
conditions or circumstances detrimental to the maintenance of a fair 
and orderly market are present.\22\ In addition, trading in iShares 
will be halted if the circuit breaker parameters under Amex Rule 117 
have been reached.
---------------------------------------------------------------------------

    \22\ See Amex Rule 918C.
---------------------------------------------------------------------------

    7. Suitability. Prior to commencement of trading, the Exchange will 
issue an Information Circular informing members and member 
organizations of the characteristics of the Funds and of applicable 
Exchange rules, as well as of the requirements of Amex Rule 411 (Duty 
to Know and Approve Customers).
    8. Purchases and Redemptions in Creation Unit Size. In the 
Information Circular referenced above, members and member organizations 
will be informed that procedures for purchases and redemptions of 
iShares in Creation Unit Size are described in the Fund prospectus and 
Statement of Additional Information, and that iShares are not 
individually redeemable but are redeemable only in Creation Unit Size 
aggregations or multiples thereof.
    9. Surveillance. Exchange surveillance procedures applicable to 
trading in the proposed iShares are comparable to those applicable to 
other Index Fund Shares currently trading on the Exchange. The Exchange 
represents that its surveillance procedures are adequate to properly 
monitor the trading of the New Funds. If the issuer or a broker-dealer 
is responsible for maintaining (or has a role in maintaining), or 
calculating the Underlying Index, it would be required to erect and 
maintain a ``Fire Wall'' in a form satisfactory to the Exchange to 
prevent the flow of information regarding the Underlying Index from the 
index production personnel and index calculation personnel to the sales 
and trading personnel. The Exchange will implement surveillance 
procedures to monitor and prevent the misuse of material, non-public 
information in connection with the indices.\23\
---------------------------------------------------------------------------

    \23\ Telephone call among Mike Cavalier, Associate General 
Counsel, Amex; Marc McKayle, Special Counsel, Division, Commission; 
and Jennifer Lewis, Special Counsel, Division, Commission, on August 
20, 2003.
---------------------------------------------------------------------------

    10. Hours of Trading/Minimum Price Variation. The New Funds will 
trade on the Amex until 4:15 p.m. (eastern time). The minimum price 
variation for quoting will be $.01.
Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Exchange Act,\24\ in general, and furthers the 
objectives of section 6(b)(5) of the Exchange Act,\25\ in particular, 
in that it is designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transaction in securities, and, in general to protect 
investors and the public interest.
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    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(5).

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[[Page 52252]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory agency consents, the Commission will:
    A. by order approve the proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposal is 
consistent with the Exchange Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Amex. All submissions should refer to File No. SR-Amex-2003-75 and 
should be submitted by September 23, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\26\
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-22234 Filed 8-29-03; 8:45 am]
BILLING CODE 8010-01-P