Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Notices 21215

2One of the Acquiring Series, Nations Managed

Index Fund, also offers Primary B Shares. Such

shares will not be part of the Reorganization.

anticipated to be May 12, 2000, the

Acquiring Series will acquire all the

assets and liabilities of the

corresponding Acquired Series in

exchange for shares of the Acquiring

Series that have an aggregate net asset

value (‘‘NAV’’) equal to the aggregate

NAV of the Acquired Series determined

as of 4 p.m. EST on the Closing Date

(‘‘Valuation Time’’). The value of assets

will be determined in the manner set

forth in the Series’ then-current

prospectus and statement of additional

information. On the day following the

Closing Date or on such other date as

may be mutually agreed, each Acquired

Series will make a pro rata distribution

of shares of the Acquiring Series to

shareholders of the Acquired Series and

liquidate.

5. Applicants state that the Acquired

Series pursue investment objectives,

follow investment strategies and present

investments risks that are generally

similar to those of the corresponding

Acquiring Series. Applicants state that

all of the Series offer identical Primary

A and Investor A shares.2 Shareholders

of the Acquired Series will not incur

any sales charges in connection with the

Reorganization. BAAI or another entity

in the Bank of America Group will be

responsible for the customary expenses

of the Reorganization.

6. The Board, including all the

Disinterested Trustees, determined that

the Reorganization is in the best

interests of each of the Acquired Series

and each of the Acquiring Series, and

that the interests of the shareholders of

the Acquired Series and Acquiring

Series would not be diluted by the

Reorganization. In assessing the Plan,

the factors considered by the Board

included, among others, (a) the terms

and conditions of the Reorganization,

(b) the expense ratios, fees and expenses

of the Acquired Series compared to the

Acquiring Series, (c) the compatibility

of investment objectives, (d) the fact that

BAAI or an affiliate will bear the

expenses incurred in connection with

the Reorganization, and (e) the tax-free

nature of the Reorganization.

7. The Reorganization Agreement is

subject to a number of conditions

precedent, including that: (1) The

shareholders of the Acquired Series

approve the Reorganization Agreement,

(b) definitive proxy solicitation

materials shall have been filed with the

Commission and distributed to

shareholders of the Acquired Series, (c)

the Acquiring and Acquired Series

receive an opinion of tax counsel that

the Reorganization will be tax-free for

each Series and its shareholders, and (d)

applicants receive from the Commission

an exemption from section 17(a) of the

Act for the Reorganization. The

Reorganization Agreement may be

terminated and the Reorganization

abandoned at any time by consent of the

Board; the Board may also terminate the

Reorganization Agreement if its

conditions are not satisfied. Applicants

agree not to make any material changes

to the Reorganization Agreement

without prior Commission approval.

8. Definitive proxy solicitation

materials have been filed with the

Commission and were mailed to

shareholders of the Acquired Series on

February 4, 2000. A special meeting of

shareholders is scheduled for April 21,

2000.

Applicants’ Legal Analysis

1. Section 17(a) of the Act generally

prohibits an affiliated person of a

registered investment company, or an

affiliated person of that person, acting as

principal, from selling any security to,

or purchasing any security from, the

company. Section 2(a)(3) of the Act

defines an ‘‘affiliated person’’ of another

person to include (a) any person that

directly or indirectly owns, controls, or

holds with power to vote 5% or more

of the outstanding voting securities of

the other person; (b) any person 5% or

more of whose outstanding voting

securities are directly or indirectly

owned, controlled or held with power to

vote by the other person; (c) any person

directly or indirectly controlling,

controlled by, or under common control

with the other person; and (d) if the

other person is an investment company,

any investment adviser of that company.

Applicants state that the Series may be

deemed affiliated persons and thus the

Reorganization prohibited by section

17(a).

2. Rule 17a–8 under the Act exempts

from the prohibitions of section 17(a)

mergers, consolidations, or purchases or

sales of substantially all of the assets of

registered investment companies that

are affiliated persons, or affiliated

persons of an affiliated person, solely by

reason of having a common investment

adviser, common directors/trustees,

and/or common officers, provided that

certain conditions set forth in the rule

are satisfied.

3. Applicants state that they may not

rely on rule 17a–8 in connection with

the Reorganization because each of the

Series may be deemed to be affiliated for

reasons other than having a common

investment adviser, common directors,

and/or common officers. Because the

Bank of America Group holds of record

more than 5% (and in some cases more

than 25%) of the outstanding voting

securities of each of the Series, each

Acquired Series may be deemed an

affiliated person of an affiliated person

of each Acquiring Series.

4. Section 17(b) of the Act provides

that the Commission may exempt a

transaction from the provisions of

section 17(a) if the evidence establishes

that the terms of the proposed

transaction, including the consideration

to be paid, are reasonable and fair and

do not involve overreaching on the part

of any person concerned, and that the

proposed transaction is consistent with

the policy of each registered investment

company concerned and with the

general purposes of the Act.

5. Applicants submit that the terms of

the Reorganization satisfy the standards

set forth in section 17(b). Applicants

note that the Board, including a majority

of the Disinterested Trustees, found that

participation in the Reorganization is in

the best interests of each Series and that

the interests of the existing shareholders

of each Series will not be diluted as a

result of the Reorganization. Applicants

also note that the exchange of the

Acquired Series’ assets for shares in the

Acquiring Series will be based on the

Series’ relative net asset values.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 00–9877 Filed 4–19–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

24393, 812–11598]

Barclays Global Fund Advisors, et al.;

Notice of Application

April 17, 2000.

AGENCY: Securities and Exchange

Commission (‘‘Commission’’).

ACTION: Notice of an application for an

order under section 6(c) of the

Investment Company Act of 1940

(‘‘Act’’) for an exemption from sections

2(a)(32), 5(a)(1), 22(d), and 22(e) of the

Act and rule 22c–1 under the Act, and

under sections 6(c) and 17(b) of the Act

for an exemption from sections 17(a)(1)

and (a)(2) of the Act.

SUMMARY OF APPLICATION: Applicants

request an order that would permit an

open-end management investment

company, whose portfolios will consist

of the component securities of certain

21216 Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Notices

1At least 90% of each Index Series’ assets will

be invested in the component securities of its

Subject Index. An Index Series may also invest up

to 10% of its assets in certain futures, option and

swap contracts, cash and cash equivalents, as well

as certain securities not included in the Subject

Index under limited circumstances.

2The Subject Indices for the Initial Index Series

are the Standard & Poor’s (‘‘S&P’’) Europe 350

Index, S&P Euro Index, S&P Global 100 Index, S&P/

TSE 60 Index, Dow Jones Global Media Sector

Index, Dow Jones Global Pharmaceuticals Sector

Index, and Dow Jones Global Telecommunications

Sector Index.

3The stock selected for inclusion in an Index

Series by the Adviser will have aggregate

investment characteristics (based on market

capitalization and industry weightings), fund

characteristics (such as return variability, earnings

valuation and yield) and liquidity measures similar

to those of the Subject Index taken in its entirety.

4On each business day, the Adviser will make

available through the Distributor, immediately prior

to the opening of trading on the AMEX, the list of

the names and the required number of shares of

each Deposit Security for each Index Series that

offers in-kind purchases of Creation Units. The

Portfolio Deposit will be applicable to purchases of

Creation Units until a change in the Portfolio

Deposit composition is next announced. In

addition, each Index Series reserves the right to

permit or require the substitution of an amount of

cash to be added to the Balancing Amount to

replace any Deposit Security that may be

unavailable or unavailable in sufficient quantity for

delivery to the Fund, or which may be ineligible for

trading by an Authorized Participant or the investor

foreign indices, to issue shares of

limited redeemability; permit secondary

market transactions in the shares of the

portfolios at negotiated prices on the

American Stock Exchange LLC

(‘‘AMEX’’); permit affiliated persons of

the portfolios to deposit securities into,

and receive securities from, the

portfolios in connection with the

purchase and redemption of

aggregations of the portfolios’ shares;

and permit certain portfolios to pay

redemption proceeds more than seven

days after the tender of shares of the

portfolios for redemption under certain

circumstances.

APPLICANTS: Barclay Global Fund

Advisors (‘‘Adviser’’), iShares Trust

(‘‘Fund’’) and its current index series

(‘‘Initial Index Series’’) and future index

series (‘‘Future Index Series’’, and

together with the Initial Index Series,

the ‘‘Index Series’’), and SEI

Investments Distribution Company

(‘‘Distributor’’).

FILING DATES. The application was filed

on April 30, 1999. Applicants have

agreed to file an amendment during the

notice period, the substance of which is

reflected in this notice.

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 May 5, 2000 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, D.C.

20549–0609. Adviser, 45 Fremont

Street, San Francisco, CA 94105; Fund,

c/o Investors Bank & Trust Company,

200 Clarendon Street, Boston, MA

02116; and Distributor, 1 Freedom

Valley Drive, Oaks, PA 19456.

FOR FURTHER INFORMATION CONTACT: Anu

Dubey, Senior Counsel, at (202) 942–

0687, or Michael Mundt, Branch Chief,

at (202) 942–0564 (Division of

Investment Management, Office of

Investment Company Regulation).

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, D.C.

20549–0102 (tel. 202–942–8090).

Applicants’ Representations

1. The Fund is an open-end

management investment company

registered under the Act and established

in the state of Delaware. The Adviser, an

investment adviser registered under the

Investment Advisers Act of 1940, will

serve as investment adviser to the Fund.

The Distributor, a broker-dealer

unaffiliated with the Adviser and

registered under the Securities

Exchange Act of 1934 (‘‘Exchange Act’’),

will serve as the principal underwriter

of the Fund’s shares on an agency basis.

2. Each Index Series will invest in a

portfolio of securities (‘‘Portfolio

Securities’’) generally consisting of the

component securities of a specified

foreign securities index (‘‘Subject

Index’’),1 There are seven Initial Index

Series.2 No entity that creates, compiles,

sponsors or maintains a Subject Index

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 Fund, the Adviser, any subadviser

to an Index Series or the Distributor.

3. The investment objective of each

Index Series will be to provide

investment results that correspond

generally to the price and yield

performance of its relevant Subject

Index. Intraday values of each Subject

Index will be disseminated every 15

seconds throughout the trading day. An

Index Series will utilize as an

investment approach either a replication

strategy or a representative sampling

strategy. An Index Series using a

replication strategy generally will hold

most of the component securities of its

Subject Index, but may not hold all of

the underlying securities that comprise

a Subject Index in certain instances.

This may be the case when, for example,

a potential component security is

illiquid or when there are practical

difficulties or substantial costs involved

in holding every security in a Subject

Index. An Index Series using a

representative sampling strategy seeks

to hold a representative sample of the

component securities of the Subject

Index and will invest in some but not

all of the component securities of its

Subject Index.3 Applicants anticipate

that an Index Series that utilizes the

representative sampling technique will

not track its Subject Index with the

same degree of accuracy as an

investment vehicle that invested in

every component security of the Subject

Index with the same weighting as the

Subject Index. Applicants expect that

each Index Series will have a tracking

error relative to the performance of its

respective Subject Index of no more

than 5 percent.

4. Shares of an Index Series

(‘‘Shares’’) will be sold in aggregations

of 50,000 Shares (‘‘Creation Units’’) as

specified in the relevant prospectus.

The price of a Creation Unit will range

from $1,000,000 to $8,500,000. Creation

Units may be purchased only by or

through a Depository Trust Company

(‘‘DTC’’) participant. The DTC

participant must enter into a participant

agreement with the Distributor

(‘‘Authorized Participant’’). Creation

Units generally will be issued in

exchange for an in-kind deposit of

securities and cash. The Index Series

also may sell Creation Units on a ‘‘cash

only’’ basis in limited circumstances.

An investor wishing to make an in-kind

purchase of a Creation Unit from an

Index Series will have to transfer to the

Fund a ‘‘Portfolio Deposit’’ consisting of

(i) a portfolio of securities that has been

selected by the Adviser to correspond

generally to the price and yield

performance of the relevant Subject

Index (‘‘Deposit Securities’’), and (ii) a

cash payment or credit to equalize any

difference between (a) the total

aggregate market value per Creation

Unit of the Deposit Securities and (b)

the net asset value (‘‘NAV’’) per

Creation Unit of the Index Series (the

‘‘Balancing Amount’’).4 An investor

Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Notices 21217

on whose behalf the Authorized Participant is

acting. In addition, the AMEX will disseminate

every 15 seconds throughout the trading day, via

the facilities of the Consolidated Tape Association,

an amount representing on a per Share basis, the

sum of the Balancing Amount effective through and

including the prior business day, plus the current

value of the Deposit Securities.

5 In situations where an Index Series permits a

purchaser to substitute cash for Deposit Securities,

the purchaser may be assessed an additional fee to

offset the Fund’s brokerage and other transaction

costs associated with using cash to purchase the

requisite Deposit Securities.

6Shares will be registered in book-entry form

only. DTC or its nominee will be the registered

owner of all outstanding Shares. Records reflecting

the beneficial owners of Shares will be maintained

by DTC or its participants.

7Applicants note that certain holders of Shares of

a particular Subject Index may be subject to

unfavorable tax treatment if they are entitled to

receive in-kind redemption proceeds. The Fund

may adopt a policy with respect to such Index

Series that such holders of Shares may redeem

Creation Unit Aggregations solely for cash.

8Applicants state that persons purchasing

Creation Units will be cautioned in the prospectus

or SAI that some activities on their part may,

depending on the circumstances, result in their

being deemed statutory underwriters and subject

them to the prospectus delivery and liability

provisions of the Securities Act of 1933 (‘‘Securities

Act’’). For example, a broker-dealer firm or its client

may be deemed a statutory underwriter if it takes

Creation Units after placing an order with the

Distributor, breaks them down into the constituent

Shares, and sells Shares directly to its customers;

or if it chooses to couple the creation of a supply

of new Shares with an active selling effort involving

solicitation of secondary market demand for Shares.

The prospectus or SAI will state that whether a

person is an underwriter depends upon all the facts

and circumstances pertaining to that person’s

activities. The prospectus or SAI also will state that

broker-dealer firms should also note that dealers

who are not ‘‘underwriters’’ but are participating in

a distribution (as contrasted to ordinary secondary

trading transactions), and thus dealing with Shares

that are part of an ‘‘unsold allotment’’ within the

meaning of section 4(3)(C) of the Securities Act,

would be unable to take advantage of the

prospectus delivery exemption provided by section

4(3) of the Securities Act.

purchasing a Creation Unit from an

Index Series will be charged a fee

(‘‘Transaction Fee’’) to prevent the

dilution of the interests of the remaining

shareholders resulting from the Index

Series incurring costs in connection

with the purchase of Creation Units.5

Each Index Series will disclose the

maximum Transaction Fees charged by

the Index Series in its prospectus and

the method of calculating the

Transaction Fees in its statement of

additional information (‘‘SAI’’).

5. Orders to purchase Creation Units

will be placed with the Distributor who

will be responsible for transmitting the

orders to the Fund. The Distributor will

issue confirmations of acceptance, issue

delivery instructions to the Fund to

implement the delivery of Creation

Units, and maintain records of the

orders and confirmations. The

Distributor also will be responsible for

delivering prospectuses to purchasers of

Creation Units.

6. Persons purchasing Creation Units

from an Index Series may hold the

Shares or sell some or all of them in the

secondary market. Shares will be listed

on the AMEX and traded in the

secondary market in the same manner as

other equity securities. One or more

AMEX specialists will be assigned to

make a market in Shares. The price of

Shares traded on the AMEX will be

based on a current bid/offer market, and

each Share is expected to have a market

value of between $20 an $170.

Transactions involving the sale of

Shares in the secondary market will be

subject to customary brokerage

commissions and charges.

7. Applicants expect that purchasers

of Creation Units will include

institutional investors and arbitrageurs

(which could include institutional

investors). The AMEX Specialist, in

providing for a fair and orderly

secondary market for Shares, also may

purchase Shares for use in its marketmaking activities on the AMEX.

Applicants expect that secondary

market purchasers of Shares will

include both institutional and retail

investors.6 Applicants believe that

arbitrageurs and other institutional

investors will purchase or redeem

Creation Units to take advantage of

discrepancies between the Shares’

market price and the Shares’ underlying

NAV. Applicants expect that this

arbitrage activity will provide a market

‘‘discipline’’ that will result in a close

correspondence between the price at

which the Shares trade and their NAV.

In other words, applicants do not expect

the Shares to trade at a significant

premium or discount to their NAV.

8. Shares will not be individually

redeemable. Shares will only be

redeemable in Creation Unit-size

aggregations through each Index Series.

To redeem, an investor will have to

accumulate enough Shares to constitute

a Creation Unit. An investor redeeming

a Creation Unit generally will receive (i)

a portfolio of Portfolio Securities in

effect on the date the request for

redemption is made (‘‘Redemption

Securities’’), which may not be identical

to the Deposit Securities applicable to

the purchase of Creation Units, and (ii)

a ‘‘Cash Redemption Payment,’’

consisting of an amount calculated in

the same manner as the Balancing

Amount, although the actual amounts

may differ if the Redemption Securities

are not identical to the Deposit

Securities. An investor may receive the

cash equivalent of a Redemption

Security in certain circumstances, such

as where a redeeming entity is

restrained by regulation or policy from

transacting in the Redemption Security.

An Index Series may redeem Creation

Units in cash in limited circumstances,

such as when it is not possible to effect

deliveries of Redemption Securities in

the applicable jurisdiction.7 A

redeeming investor will pay a

Transaction Fee to offset the Fund’s

transaction costs, whether the

redemption proceeds are in-kind or

cash. An additional variable charge,

expressed as a percentage of the

redemption proceeds, will be made for

cash redemptions.

9. Because each Index Series will

redeem Creation Units in-kind, an Index

Series will not have to maintain cash

reserves for redemptions. This will

allow the assets of each Index Series to

be committed as fully as possible to

tracking its Subject Index. Accordingly,

applicants state that each Index Series

will be able to track its Subject Index

more closely than certain other

investment products that must allocate

a greater portion of their assets for cash

redemptions.

10. Applicants state that neither the

Fund nor any Index Series will be

marketed or otherwise held out as an

‘‘open-end investment company’’ or a

‘‘mutual fund.’’ Rather, the designation

of the Fund and the Index Series in all

marketing materials will be limited to

the terms ‘‘exchange-traded fund,’’

‘‘investment company,’’ ‘‘fund,’’ or

‘‘trust’’ without reference to an ‘‘openend fund’’ or ‘‘mutual fund,’’ except to

contrast the Fund and the Index Series

with a conventional open-end

investment company. Any marketing

materials that describe the purchase or

sale of Creation Units, or refer to

redeemability, will prominently

disclose that Shares are not individually

redeemable and that owners of Shares

may tender Shares for redemption to the

Fund in Creation Unit aggregations

only. The same type of disclosure will

be provided in each Index Series’

prospectus, SAI, and all reports to

shareholders.8 The Fund will provide

copies of its annual and semi-annual

shareholder reports to DTC participants

for distribution to beneficial holders of

Shares.

Applicants’ Legal Analysis

1. Applicants request an order under

section 6(c) of the Act granting an

exemption from sections 2(a)(32),

5(a)(1), 22(d), and 22(e) 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. Applicants

21218 Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Notices

9Specifically, applicants request that the (i) S&P

Euro Index Series, S&P Europe 350 Index Series and

S&P Global 100 Index Series be permitted to make

redemption payments up to ten calendar days after

the tender of a Creation Unit for redemption, and

(ii) Dow Jones Global Media Sector Index Series,

Dow Jones Global Phamaceuticals Sector Index

Series and Dow Jones Global Telecommunications

Sector Index Series be permitted to make

redemption payments up to twelve calendar days

after the tender of a Creation Unit for redemption.

10Applicants acknowledge that no relief obtained

from the requirements of section 22(e) will affect

any obligations applicants may otherwise have

under rule 15c–1 under the Exchange Act. Rule

15c6–1 requires that most securities transactions be

settled within three business days of the trade date.

Release No. IC–23860, 1999 WL 3621843 (S.E.C.).

request relief for the Initial Index Series

as well as Future Index Series. Any

Future Index Series relying on any order

granted pursuant to this application will

comply with the terms and conditions

in the application.

2. Section 6(c) of the Act provides that

the Commission may exempt any

person, security, or transaction, or any

class of persons, securities, or

transactions, if and to the extent that

such exemption is necessary or

appropriate in the public interest and

consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the Act.

Sections 5(a)(1) and 2(a)(32) of the Act

3. Section 5(a)(1) of the Act defines an

‘‘open-end company’’ as a management

investment company that is offering for

sale or has outstanding any redeemable

security of which it is the issuer.

Section 2(a)(32) of the Act defines a

redeemable security as any security,

other than short-term paper, under the

terms of which the holder, upon its

presentation to the issuer, is entitled to

receive approximately his proportionate

share of the issuer’s current net assets,

or the cash equivalent. Because Shares

will not be individually redeemable,

applicants request an order under

section 6(c) of the Act that would permit

the Fund to register and operate as an

open-end management investment

company and issue Shares that are

redeemable in Creation Units.

Applicants state that investors may

purchase Shares in Creation Units from

each index Series and redeem Creation

Units through each Index Series.

Applicants further state that because the

market price of Creation Units will be

disciplined by arbitrage opportunities,

investors generally should be able to sell

Shares in the secondary market at

approximately their NAV.

Section 22(d) of the Act and Rule 22c–

1 Under the Act

4. Section 22(d) of the Act, among

other things, prohibits a dealer from

selling a redeemable security that is

being currently offered to the public by

or through an underwriter, except at a

current public offering price described

in the prospectus. Rule 22c–1 under the

Act generally requires that a dealer

selling, redeeming, or repurchasing a

redeemable security do so only at a

price based on its NAV. Applicants state

that secondary market trading in Shares

will take place at negotiated prices, not

at a current offering price described in

the prospectus, and not at a price based

on NAV. Thus, purchases and sales of

Shares in the secondary market will not

comply with section 22(d) and rule 22c–

1. Applicants request an exemption

under section 6(c) of the Act from these

provisions.

5. Applicants assert that the concerns

sought to be addressed by section 22(d)

of the Act and rule 22c–1 under the Act

with respect to pricing are equally

satisfied by the proposed method of

pricing Shares. Applicants maintain that

while there is little legislative history

regarding section 22(d), its provisions,

as well as those of rule 22c–1, appear to

have been designed to (i) prevent

dilution caused by certain risklesstrading schemes by principal

underwriters and contract dealers, (ii)

prevent unjust discrimination or

preferential treatment among buyers

resulting from sales at different prices,

and (iii) assure an orderly distribution

of investment company shares by

eliminating price competition from

dealers offering shares at less than the

published sales price and repurchasing

shares at more than the published

redemption price.

6. Applicants believe that none of

these purposes will be thwarted by

permitting Shares to trade in the

secondary market at negotiated prices.

Applicants state (i) that secondary

market trading in Shares would not

cause dilution for owners of Shares

because such transactions do not

directly involve Index Series assets, and

(ii) to the extent different prices exist

during a given trading day, or from day

to day, these variances will occur as a

result of third-party market forces, such

as supply and demand. Therefore,

applicants assert that secondary market

transactions in Shares will not lead to

discrimination or preferential treatment

among purchasers. Finally, applicants

contend that the proposed distribution

system will be orderly because arbitrage

activity will ensure that the difference

between the market price of Shares and

their NAV remains narrow.

Section 22(e) of the Act

7. Section 22(e) of the Act generally

prohibits a registered investment

company from suspending the right of

redemption or postponing the date of

payment of redemption proceeds for

more than seven days after the tender of

a security for redemption. Applicants

state that local market delivery cycles

for transferring Redemption Securities

to redeeming investors, together with

local market holiday schedules, will

require a delivery process in excess of

seven calendar days for some Index

Series in certain circumstances during

the calendar year. Applicants request

relief under section 6(c) from section

22(e) so that certain of the Index Series

may pay redemption proceeds up to

twelve calendar days after the tender of

Shares for redemption.9 Except as

otherwise subsequently disclosed in the

prospectus or SAI for the relevant Index

Series, applicants expect, however, that

these Index Series will be able to deliver

redemption proceeds within seven days

at all other times.10 With respect to

Future Index Series, applicants seek the

same relief from section 22(e) only to

the extent that circumstances exist

similar to those described herein.

8. The principal reasons for the

requested exemption is that settlement

of redemptions for the Index Series is

contingent not only on the settlement

cycle of the United States market but

also on the currently practicable

delivery cycles in the local markets for

the underlying foreign securities of each

Index Series. Applicants believe that the

Fund will be able to comply with the

delivery requirements of section 22(e)

except where the holiday schedule

applicable to the specific foreign market

will not permit delivery of redemption

proceeds within seven calendar days.

9. Applicants state that section 22(e)

of the Act was designed to prevent

unreasonable, undisclosed, and

unforeseen delays in the payment of

redemption proceeds. Applicants assert

that their requested relief will not lead

to the problems section 22(e) was

designed to prevent. Delays in the

payment of Shares redemption proceeds

will occur principally due to local

holidays. Applicants state that the SAI

will disclose those local holidays (over

the period of at least one year following

the date of the SAI), if any, that are

expected to prevent the delivery of

redemption proceeds in seven calendar

days and the maximum number of days

needed to deliver the proceeds for each

Index Series. Applicants state that the

local holidays relevant to each Index

Series as in effect in a given year will

be listed in the series’ prospectus or SAI

or both, and these disclosure documents

will identify instances in such year

when, due to such holidays, more than

Federal Register / Vol. 65, No. 77 / Thursday, April 20, 2000 / Notices 21219

seven days will be needed to deliver

redemption proceeds.

Section 17(a) of the Act

10. Section 17(a) of the Act generally

prohibits an affiliated person of a

registered investment company, or an

affiliated person of such person, from

selling any security to or purchasing any

security from the company. Because

purchases and redemptions of Creation

Units may be ‘‘in kind’’ rather than cash

transactions, section 17() may prohibit

affiliated persons of an Index Series

from purchasing or redeeming Creation

Units in-kind. Because the definition of

‘‘affiliated person’’ of another person in

section 2(a)(3)(A) of the Act includes

any person owning five percent or more

of an issuer’s outstanding voting

securities, every purchaser of a Creation

Unit will be affiliated with the Index

Series so long as fewer than twenty

Creation Units are in existence. In

addition, any person owning more than

25% of the Shares of an Index Series

may be deemed an affiliated person

under section 2(a)(3)(C) of the Act.

Applicants request an exemption from

section 17(a) under sections 6(c) and

17(b), to permit these affiliated persons

of the Index Series to purchase and

redeem Creation Units.

11. Section 17(b) authorizes the

Commission to exempt a proposed

transaction from section 17(a) if

evidence establishes that the terms of

the transaction, including the

consideration to be paid or received, are

reasonable and fair and do not involve

overreaching, and the proposed

transaction is consistent with the

policies of the registered investment

company and the general provisions of

the Act. Applicants contend that no

useful purpose would be served by

prohibiting persons with the types of

affiliations described above from

purchasing or redeeming Creation Units.

The deposit procedure for in-kind

purchases and redemptions will be the

same for all purchases and redemptions,

and Deposit Securities and Redemption

Securities will be valued under the

same objective standards applied to

valuing Portfolio Securities. Therefore,

applicants state that in-kind purchases

and redemptions will afford no

opportunity for an affiliated person of

an Index Series to effect a transaction

detrimental to the other holders of

Shares. Applicants also believe that inkind purchases and redemptions will

not result in abusive self-dealing or

overreaching by affiliated persons of the

Index Series.

Applicants’ Conditions

Applicants agree that the order

granting the requested relief will be

subject to the following conditions:

1. Applicants will not register a

Future Index Series of the Fund by

means of filing a post-effective

amendment to the Fund’s registration

statement or by any other means, unless

(i) applicants have requested and

received with respect to such Future

Index Series, either exemptive relief

from the Commission or a no-action

letter from the Division of Investment

Management of the Commission or (ii)

the Future Index Series will be listed on

a national securities exchange without

the need for a filing pursuant to rule

19b–4 under the Exchange Act.

2. Each Index Series’ prospectus will

clearly disclose that, for purposes of the

Act, Shares are issued by the Index

Series and that the acquisition of Shares

by investment companies is subject to

the restrictions of section 12(d)(1) of the

Act.

3. As long as the Fund operates in

reliance on the requested order, the

Shares will be listed on a national

securities exchange.

4. Neither the Fund nor any Index

Series will be advertised or marketed as

an open-end fund or mutual fund. Each

Index Series’ prospectus will

prominently disclose that Shares are not

individually redeemable shares and will

disclose that the owners of Shares may

acquire those Shares from the Index

Series and tender those shares for

redemption to the Index Series in

Creation Units only. Any advertising

material that describes the purchase or

sale of Creation Units or refers to

redeemability will prominently disclose

that Shares are not individually

redeemable and that owners of Shares

may acquire those Shares from the

Index Series and tender those Shares for

redemption to the Index Series in

Creation Units only.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–9938 Filed 4–19–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

24394, 812–11600]

Barclays Global Fund Advisors, et al.;

Notice of Application

April 17, 2000.

AGENCY: Securities and Exchange

Commission (‘‘Commission’’).

ACTION: Notice of an application for an

order under section 6(c) of the

Investment Company Act of 1940

(‘‘Act’’) for 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

for an exemption from sections 17(a)(1)

and (a)(2) of the Act.

SUMMARY OF APPLICATION: Applicants

request an order that would permit an

open-end management investment

company, whose portfolios will consist

of the component securities of certain

domestic indices, to issue shares of

limited redeemability; permit secondary

market transactions in the shares of the

portfolios at negotiated prices on the

American Stock Exchange LLC

(‘‘AMEX’’); and permit affiliated persons

of the portfolios to deposit securities

into, and receive securities from, the

portfolios in connection with the

purchase and redemption of

aggregations of the portfolios’ shares.

APPLICANTS: Barclays Global Fund

Advisors (‘‘Adviser’’), iShares Trust

(‘‘Fund’’) and its current index series

(‘‘Initial Index Series’’) and future index

series (‘‘Future Index Series,’’ and

together with the Initial Index Series,

the ‘‘Index Series’’), and SEI

Investments Distribution Company

(‘‘Distributor’’).

FILING DATES: The application was filed

on April 30, 1999. Applicants have

agreed to file an amendment during the

notice period, the substance of which is

reflected in this notice.

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 May 5, 2000 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