Federal Register / Vol. 62, No. 169 / Tuesday, September 2, 1997 / Notices 46387

performance of contracts for registered

holding companies or their subsidiaries,

for services, construction, or sales of

goods. The Commission requires this

information to enforce the provisions of

Section 13(e) and Section 13(f) of the

Act. The enforcement of these statutes

would be compromised without the

collection of this information, which is

not available from other sources.

Companies that file under this rule are

required to retain records for a period of

six years, and the provision of this

information is required. The retention

period allows the Commission to

perform its audit functions. One

company meets this requirement on an

annual basis with an estimated average

burden of two hours. This information

is not kept confidential.

Form U–7D [17 CFR 259.404]

establishes the filing company’s right to

the exemption authorized for financing

entities holding title to utility assets

leased to a utility company. The

information is necessary for the

Commission to determine whether a

company is exempt from, or governed

by, the Act. The form imposes a total

annual burden of 126 hours on 42

respondents, who each spend three

hours annually preparing and filing one

response. Companies filing under this

rule are required to retain records for a

period of ten years, and the provision of

the information is mandatory. The

retention time period allows the

Commission the opportunity to perform

its audit functions, and generally

coincides with companies’ obligation

period under their respective leases.

Responses are not kept confidential.

The estimates of average burden hours

are made for the purposes of the

Paperwork Reduction Act and are not

derived from a comprehensive or even

a representative survey or study of the

costs of Commission rules and forms.

An agency may not conduct or

sponsor, and a person is not required to

respond to, a collection of information

unless it displays a currently valid

control number.

Written comments regarding the

above information should be directed to

the following persons: (i) Desk Officer

for the Securities and Exchange

Commission, Office of Information and

Regulatory Affairs, Office of

Management and Budget, Room 3208,

New Executive Office Building,

Washington, D.C. 20503; and (ii)

Michael E. Bartell, Associate Executive

Director, Office of Information

Technology, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Comments

must be submitted to OMB within 30

days of this notice.

Dated: August 25, 1997.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–23136 Filed 8–29–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–22798; File No. 812–10364]

Monarch Life Insurance Company, et

al.

August 25, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’).

ACTION: Notice of Application for an

Order under the Investment Company

Act of 1940 (‘‘1940 Act’’).

APPLICANTS: Monarch Life Insurance

Company (‘‘Monarch Life’’) and

Monarch Separate Account VA

(‘‘Separate Account VA’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 26(b).

SUMMARY OF APPLICATION: Applicants

seek an order approving the substitution

of shares of certain funds (‘‘Funds’’) of

Merrill Lynch Variable Series Funds,

Inc. (‘‘ML Fund’’) for shares of certain

series (‘‘Portfolios’’) of Variable

Investors Series Trust (‘‘VIST’’) held by

Separate Account VA to fund certain

variable annuity contracts (‘‘Contracts’’)

issued by Monarch Life.

FILING DATE: The Application was filed

on September 25, 1996, and an

amendment thereto was filed on May

29, 1997.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the Commission orders a

hearing. Interested persons may request

a hearing by writing to the Secretary of

the Commission 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 19, 1997, and

should be accompanied by proof of

service on Applicants in the form of an

affidavit or, for lawyers, a certificate of

service. Hearing request should state the

nature of the requester’s interest, the

reason for the request, and the issues

contested. Persons may request

notification of a hearing by writing to

the Secretary of the Commission.

ADDRESSES: Secretary, Securities and

Exchange Commission, 450 Fifth Street,

N.W., Washington, DC 20549.

Applicants, c/o Raymond A. O’Hara III,

Esq., Blazzard, Grodd & Hasenauer, P.C.,

P.O. Box 5108, Westport, Connecticut,

06881. Copies to John S. Coulton, Esq.,

Monarch Life Insurance Company, One

Monarch Place, Springfield, MA 01133.

FOR FURTHER INFORMATION CONTACT:

Joyce Merrick Pickholz, Senior Counsel,

or Kevin M. Kirchoff, Branch Chief,

Office of Insurance Products (Division

of Investment Management), at (202)

942–0670.

SUPPLEMENTARY INFORMATION: Following

is a summary of the Application. The

complete Application is available for a

free from the Public Reference Branch of

the Commission.

Applicants’ Representations

Background

1. Monarch Life was incorporated in

1901 and is domiciled in Massachusetts.

Monarch Life is a wholly-owned

subsidiary of Regal Reinsurance

Company (‘‘Regal Re’’), formerly

Monarch Capital Corporation

(‘‘Monarch Capital’’). On September 23,

1992, pursuant to a reorganization

under Chapter 11 of the Federal

Bankruptcy Code, Monarch Capital was

reorganized and emerged from

bankruptcy as a Massachusetts life

insurer, Regal Re. Regal Re is owned by

Monarch Capital’s pre-bankruptcy

secured and unsecured creditors.

2. On June 9, 1994, the Insurance

Commissioner of the Commonwealth of

Massachusetts (the ‘‘Commissioner’’)

was appointed receiver (the ‘‘Receiver’’)

of Monarch Life in a rehabilitation

proceeding pending before the Supreme

Judicial Court for Suffolk County,

Massachusetts (the ‘‘Court’’).

3. A term sheet dated July 19, 1994

(the ‘‘Term Sheet’’) among the

Commissioner (in her capacity as

Commissioner and Receiver) and certain

Regal Re shareholders and noteholders

and holders of Monarch Life’s surplus

notes (representing approximately 85%

of both the total outstanding Regal Re

notes and common stock) (the

‘‘Holders’’) was approved by the Court

on September 1, 1994. Pursuant to the

Term Sheet, the Holders transferred

their notes and stock into voting trusts

for which the Commissioner is the sole

trustee, which effectively vests control

of Regal Re and Monarch Life in the

Commissioner.

4. Insurance department of various

jurisdictions have either suspended the

certificate of authority of Monarch Life,

ordered Monarch Life to cease writing

new business, or have requested a

voluntary suspension of sales by

Monarch Life. In addition, Monarch

Life’s certificate of authority has been

revoked by the insurance departments

of the states of Louisiana on May 13,

1994, Michigan on February 27, 1994,
46388 Federal Register / Vol. 62, No. 169 / Tuesday, September 2, 1997 / Notices

1The Board of Directors of the ML Fund has

approved a change in the name of the Equity

Growth Fund to the Special Value Focus Fund.

Missouri on November 10, 1994 and

Wyoming on June 25, 1992.

5. Monarch Life currently limits its

business to maintaining its existing

blocks of disability income insurance,

variable life insurance, and annuity

businesses. Monarch Life ceased issuing

new variable life policies and new

annuity contracts effective May 1, 1992,

and new disability income insurance

policies effective June 15, 1993.

6. Separate Account VA, a separate

account of Monarch Life, was

established under Massachusetts law on

October 20, 1987, for the purpose of

funding the Contracts which invest in

VIST. Separate Account VA is registered

under the 1940 Act as a unit investment

trust and security interest under the

Contracts have been registered under

the Securities Act of 1933 (‘‘1933 Act’’)

on Form N–4 (File No. 33–21238).

Separate Account VA is currently

divided into seven sub-accounts, each of

which reflects the investment

performance of a corresponding

Portfolio of VIST.

7. VIST currently offers shares of its

Portfolios to corresponding subaccounts of Separate Account VA and

certain separate accounts of First

Variable Life Insurance Company (‘‘First

Variable Life’’). VIST was organized as

a Massachusetts business trust under

the laws of Massachusetts on December

23, 1986, and is registered under the

1940 Act as an open-end management

investment company of the series type.

VIST currently offers nine Portfolios.

8. The Cash Management Portfolio

seeks to preserve shareholder capital, to

maintain liquidity, and to achieve

maximum current income consistent

with the foregoing objectives by

investing exclusively in a diversified

portfolio of short-term money market

securities. The High Income Bond

Portfolio primarily invests in high yield,

high risk, fixed-income securities to

obtain as high a level of current income

as is believed to be consistent with

prudent investment management and, as

a secondary objective, capital

appreciation when consistent with its

primary objective. The Multiple

Strategies Portfolio seeks to achieve as

high a level of total return over an

extended period of time as the adviser

and sub-adviser consider consistent

with prudent investment risk. The

Growth Portfolio (formerly the

‘‘Common Stock Portfolio’’) seeks

capital growth by investing primarily in

a diversified portfolio of common stocks

and securities convertible into or

exchangeable for common stocks,

including convertible preferred stock,

convertible debentures, warrants, and

options. As a secondary objective, the

Growth Portfolio may seek current

income when consistent with its

primary investment objective. The U.S.

Government Bond Portfolio seeks

current income and preservation of

capital through investment primarily in

securities issued or guaranteed as to

principal and interest by the U.S.

Government or by its agencies,

authorities, or instrumentalities. The

investment objective of the Matrix

Equity Portfolio is capital appreciation

and current income to be achieved by

investing in a diversified portfolio of

equity securities that is selected by State

Street Global Advisors, the Sub-Advisor,

on the basis of its proprietary model.

Sector weights are maintained at a

similar level to the S&P 500 Index. The

Portfolio will invest at least 65% of its

total assets in equity securities. The

World Equity Portfolio seeks maximum

long-term total return by investing

primarily in common stocks, and

securities convertible into common

stocks, traded in securities markets

located around the world, including the

United States.

9. First Variable Advisory Services

Corp. (‘‘FVAS’’), a wholly-owned

subsidiary of First Variable, is the

investment adviser for VIST. FVAS has

engaged sub-advisers for each Portfolio

to make investment decisions and place

orders.

10. The shares of the ML Fund are

sold to separate accounts of certain

insurance companies to fund benefits

under variable annuity contracts and/or

variable life insurance policies issued

by such companies. The ML Fund was

incorporated on October 16, 1981, and

is registered under the 1940 Act as an

open-end management investment

company of the series type. The ML

Fund currently offers sixteen Funds,

seven of which are relevant herein.

11. The investment objectives of the

Domestic Money Market Fund of the ML

Fund are to preserve shareholder

capital, to maintain liquidity and to

achieve the highest possible current

income consistent with the foregoing

objectives by investing in short-term

domestic money market securities. The

primary investment objective of the

High Current Income Fund is to obtain

the highest level of current income that

is consistent with the investment

policies of the Fund and with prudent

investment management. As a

secondary objective, the High Current

Income Fund seeks capital appreciation

when consistent with its primary

objective. The Quality Equity Fund

seeks to achieve the highest total

investment return, or the aggregate of

income and capital value changes,

consistent with prudent risk. The

investment objective of the Equity

Growth Funds 1 is to seek long-term

growth of capital by investing in a

diversified portfolio of securities,

primarily common stocks, of relatively

small companies that management of

the ML Fund believes have special

investment value, and of emerging

growth companies regardless of size.

The investment objective of the

Government Bond Fund (formerly the

‘‘Intermediate Government Bond Fund’’)

is to seek the highest possible current

income consistent with the protection of

capital afforded by investing in debt

securities issued or guaranteed by the

U.S. Government, its agencies or

instrumentalities. The investment

objective of the Basic Value Focus Fund

is to seek capital appreciation and,

secondarily, income by investing in

securities, primarily equities, that

management of the Fund believes are

undervalued and therefore represent

basic investment value. The investment

objective of the Global Strategy Focus

Fund is to seek high total investment

return by investing primarily in a

portfolio of equity and fixed income

securities, including convertible

securities, of U.S. and foreign issuers.

12. Merrill Lynch Asset Management,

L.P. (‘‘MLAM’’), an indirect whollyowned subsidiary of Merrill Lynch &

Co., Inc., is the investment adviser for

each of the Funds.

13. Certain separate accounts of

Monarch Life currently are invested in

the shares of other investment

companies advised by MLAM, the

investment adviser to the ML Fund.

Further, an affiliate of MLAM provides

third party administrative services to

Monarch Life in connection with its

variable life insurance operations. Given

its existing relationship with the Merrill

Lynch organization and given the fact

that it is no longer affiliated with First

Variable Life, Monarch Life determined

that it was in its best interests and in the

best interests of its variable annuity

contract owners to pursue the

substitutions.

14. Applicants state that the VIST

Portfolios are relatively small when

compared with many other similar

investment portfolios of open-end

management investment companies. As

a result, the annual expense ratios of

these Portfolios have generally been

higher than the ratios of many similar

but larger funds. Applicants state

further that, although the recent

performance of the VIST Portfolios has

been generally good, frequent changes
Federal Register / Vol. 62, No. 169 / Tuesday, September 2, 1997 / Notices 46389

in the VIST investment advisory

arrangements over the years have

contributed to a somewhat erratic longterm performance record.

The Proposed Substitution

15. Applicants propose that Monarch

Life substitute shares of the Funds of the

ML Fund (each, a ‘‘substitute fund’’,

together the ‘‘substitute funds’’) for

shares of the Portfolios of VIST (each a

‘‘removed fund’’, together the ‘‘removed

funds’’) as follows: (1) Shares of the

Domestic Money Market Fund for shares

of the Cash Management Portfolios; (2)

shares of the High Current Income Fund

for shares of the High Income Bond

Portfolio; (3) shares of the Quality

Equity Fund for shares of the Multiple

Strategies Portfolio; (4) shares of the

Equity Growth Fund for shares of the

Growth Portfolio; (5) shares of the

Government Bond Fund for shares of

the U.S. Government Bond Portfolio; (6)

shares of the Basic Value Focus Fund

for shares of the Matrix Equity Portfolio;

and (7) shares of the Global Strategy

Focus Fund for shares of the World

Equity Portfolio.

16. Applicants propose to have

Monarch Life redeem shares of each

removed fund in cash and purchase

with the proceeds shares of the

substitute fund identified above. The

proposed substitution would not change

the number of subaccounts in Separate

Account VA.

17. By supplement to the prospectus

for the Contracts and Separate Account

VA, Contract owners were notified of

the proposed substitutions. The

supplement advised owners that they

retained the ability to allocate net

purchase payments, or transfer contracts

values to the subaccounts of Separate

Account VA corresponding to each of

the removed funds until the date of the

substitutions.

18. Applicants state that the proposed

substitutions will take place at relative

net asset value with no change in the

amount of any Contract owner’s

Contract value or in the dollar value of

his or her investment in Separate

Account VA. Contract owners will not

incur any fees or charges as a result of

the proposed substitutions nor will their

rights under the Contracts be altered in

any way. All expenses incurred in

connection with the proposed

substitutions, including legal,

accounting and other fees and expenses,

will be paid by Monarch Life. In

addition, the proposed substitutions

will not result in the imposition of any

tax liability on Contract owners. The

proposed substitutions will not cause

the Contract fees and charges currently

being paid by existing Contract owners

to be greater after the proposed

substitutions than before the proposed

substitutions.

19. Applicants state that in addition

to the prospectus supplements

distributed to owners of Contracts,

within 5 days after the proposed

substitutions, all owners who were

affected by a substitution will be sent a

written notice informing them that the

substitutions were carried out. Monarch

Life will include in such mailing the

supplement to the prospectus of

Separate Account VA, which describes

the substitutions.

20. Monarch Life and certain of its

separate accounts (including Separate

Account VA) (collectively, ‘‘Accounts’’)

have previously received no-action

assurances from the staff of the

Commission that the staff would not

recommend that the Commission take

any enforcement action against Monarch

Life or the Accounts if post-effective

amendments to registration statements

are not filed under the 1933 Act and the

1940 Act, and updated prospectuses for

the Accounts are not distributed to

owners of existing variable contracts

issued through the Accounts provided

that certain conditions are met

(Monarch Life Insurance Company, pub.

avail. June 9, 1992, referred to herein as

the ‘‘June 9th No-Action Letter’’). The

conditions of the June 9th No-Action

Letter include providing various

documents to the variable contract

owners including, but not limited to,

periodic reports, prospectuses, proxy

statements and related voting

instructions pertaining to the relevant

underlying mutual funds. In accordance

with the terms of the June 9th NoAction Letter, Monarch Life does not

update the Separate Account VA

prospectus on an annual basis as would

otherwise be required by the 1933 Act

and the 1940 Act. Therefore, Contract

owners do not have the benefit of

receiving an updated Separate Account

VA prospectus which would provide

them with certain information

concerning the ML Fund. In light of this

fact, Applicants undertake to provide

the variable contract owners of Separate

Account VA with the same disclosure

concerning the ML Fund as such owners

would receive if Monarch Life updated

and mailed its Separate Account VA

prospectus to owners. Such information

primarily consists of a fee table for

Separate Account VA, which includes

the fees and expenses of the ML Fund,

and a description of the investment

objectives of each of the Funds of the

ML Fund.

21. Applicants state that following the

substitutions, Contract owners will be

afforded the same contract rights,

including surrender an other transfer

rights with regard to amounts invested

under the Contracts, as they currently

have. (Monarch Life currently imposes

no restrictions or fees on the ability of

Contract owners to make transfers nor

does it intend to impose any after the

proposed substitutions are effected.)

Applicants’ Legal Analysis

22. Section 26(b) of the 1940 Act

provides, in pertinent part, that ‘‘[i]t

shall be unlawful for any depositor or

trustee of a registered unit investment

trust holding the security of a single

issuer to substitute another security for

such security unless the Commission

shall have approved such substitution.’’

The purpose of Section 26(b) is to

protect the expectation of investors in a

unit investment trust that the unit

investment trust will accumulate the

shares of a particular issuer and to

prevent unscrutinized substitutions

which might, in effect, force

shareholders dissatisfied with the

substituted security to redeem their

shares, thereby possibly incurring either

a loss of the sales load deducted from

initial purchase payments, an additional

sales load upon reinvestment of the

redemption proceeds, or both. Section

26(b) affords this protection to investors

by preventing a depositor or trustee of

a unit investment trust holding the

shares of one issuer from substituting

for those shares the shares of another

issuer, unless the Commission approves

that substitution.

23. Applicants maintain that the

purposes, terms and conditions of the

Substitution are consistent with the

principles and purposes of Section 26(b)

and do not entail any of the abuses that

Section 26(b) is designed to prevent.

24. Applicants assert that each of the

substitute funds is substantially larger

than the removed fund that it would

replace. Each of the substitute funds has

also had significantly more favorable

expense ratios over the past three years

than the removed fund that it would

replace. Applicants assert that recent

investment performance between the

substitute funds and the removed funds

has been generally comparable.

Applicants anticipate that, after the

proposed substitutions, the substitute

funds will provide Contract owners

with comparable or more favorable

investment results than would be the

case if the proposed substitutions do not

take place. Applicants further assert that

each of the substitute funds is a suitable

and appropriate investment vehicle for

Contract owners. Each of the substitute

funds has substantially identical

investment objectives to the removed

fund that it would replace.
46390 Federal Register / Vol. 62, No. 169 / Tuesday, September 2, 1997 / Notices

1 15 U.S.C 78s(b)(1).

2 17 CFR 240.19b–4.

3The AMEX submitted additional information

regarding the component securities. This

information is available in the Commission’s public

reference room, as described in section IV below,

or at the Office of the Secretary, AMEX.

4See Securities Exchange Act Release No. 34157

(June 3, 1994), 59 FR 30062 (June 10, 1994) (SR–

AMEX–92–35) (approval order relating to narrowbased index options listing standards) (‘‘Generic

Index Approval Order’’).

25. Applicants assert that, although

the Equity Growth Fund invests

primarily in the securities of relatively

small companies, while the Growth

Portfolio does not focus on companies

with small market capitalizations, the

investment objective of each of the

Equity Growth Fund and the Growth

Portfolio is capital growth and each

invests primarily in equity securities.

Because capital growth is the

investment objective for both the Equity

Growth Fund and the Growth Portfolio,

Applicants believe that the investment

goals of owners will continue to be

achieved after the substitution and that

the differences between the investment

policies are non-material to the

achievement of the investment goals of

the owners.

26. Applicants generally submit that

the proposed substitutions meet the

standards that the Commission and its

staff have applied to substitutions that

have been approved in the past in that:

a. The expense ratios of each of the

Funds of the ML Fund are substantially

lower than the expense ratios of the

corresponding VIST Portfolios and are

expected to remain so;

b. The substitution will be at net asset

value of the respective shares, without

the imposition of any transfer or similar

charge;

c. Monarch Life has undertaken to

assume the expenses and transaction

costs, including among others, legal and

accounting fees and any brokerage

commissions, relating to the

substitution;

d. The substitution in no way will

alter the insurance benefits to Contract

owners or the contractual obligations of

Monarch Life;

e. The substitution in no way will

alter tax benefits to Contract owners;

f. Contract owners may choose simply

to withdraw amounts credited to them

following the substitution under the

conditions that currently exist without

incurring any charges; and

g. The substitution is expected to

confer certain economic benefits to

Contract owners by virtue of the

enhanced asset size of the substitute

funds. Conclusion:

Applicants submit, for the reasons

summarized above, that the proposed

substitution is consistent with the

protection of investors and the purposes

fairly intended by the policy and

provisions of the 1940 Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–23185 Filed 8–29–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38968; File No. SR–AMEX–

97–31]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

American Stock Exchange, Inc.,

Relating to Options on The Disk Drive

Index

August 25, 1997.

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 19, 1997, the American Stock

Exchange, Inc. (‘‘AMEX’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘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.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The AMEX proposes to trade options

on The Disk Drive Index (‘‘the Index’’),

a new stock index developed by the

AMEX based on stocks, or American

Depositary Receipts (‘‘ADRs’’) thereon,

of companies involved in the design

and/or manufacture of disk drives,

components of disk drives, and/or

software designed to interact with disk

drives. AMEX proposes to amend its

Rule 901C, Commentary .01, to provide

for the listing and trading of the Index.

In addition, the AMEX proposes to

amend Rule 901C, Commentary .01, to

reflect that 90 percent of the Index’s

numerical index value will be

accounted for by stocks that meet the

current criteria and guidelines set forth

in AMEX Rule 915.

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

1. Purpose

The AMEX has developed a new

index called The Disk Drive Index

(‘‘Index’’), based entirely on shares of

widely held companies involved in the

design and/or manufacture of disk

drives, components of disk drives, and/

or software designed to interact with

disk drives. The companies represented

in the index include: Applied Magnetics

Corp., a supplier of magnetic heads for

disk-drive applications; HMT

Technologies Corp., a designer and

manufacturer of thin-film disks for highcapacity computer disk drives;

Hutchinson Technology, a supplier of

suspension assemblies for rigid disk

drives; Iomega Corp., a manufacturer of

removable data-storage devices; Komag

Inc., a manufacturer of components for

hard-disk drives, including thin-film

disks and recording heads; Quantum

Corp., a manufacturer of storage

products for computer systems; ReadRite Corp., a producer of thin-film

magnetic recording heads for hard-disk

drives; Seagate Technology, a designer

of rigid, magnetic disk drives and

components for computer systems;

Storage Technology, a manufacturer of

information storage and retrieval

subsystems and networking products;

and Western Digital Corp., a

manufacturer of hard-disk drives.3 The

AMEX intends to trade standardized

option contracts on the newly

developed Index. The AMEX is filing

this proposal pursuant to AMEX Rule

901C, Commentary .02, which provides

for the commencement of the trading of

options on the Index thirty days after

the date of this filing. The proposal

meets all the criteria set forth in

Commentary .02 and the Commission’s

order approving that rule as outlined

below.4

Eligibility criteria for index

components. Pursuant to Commentary

.02 to Rule 901C, (1) each of the

component securities has a minimum

market capitalization of at least $75

million and has a trading volume in