71874 Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Notices 

7 15 U.S.C. 78o–3. 

8 15 U.S.C. 78o–3(b)(5). 

9 15 U.S.C. 78s(b)(3)(A)(ii). 

10 17 CFR 240.19b–4(f)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Nasdaq currently charges customers 

$.288 per initial request and per each 

subsequent use of the ‘‘More’’ function. 

Thus, Nasdaq customers would incur 

additional incremental costs as they 

increased their trade reporting activity. 

Nasdaq has implemented new 

technology that modifies the ‘‘Browse/ 

Query’’ function. The modified 

‘‘Browse/Query’’ function has been 

renamed the ‘‘Query’’ function and each 

‘‘Query’’ request now provides a 

complete summary of all trade reporting 

activity per request. Nasdaq customers 

no longer have to use the ‘‘More’’

function to view the next 18 records. 

Under the proposed rule change, users 

of the new ‘‘Query’’ function will be 

charged $.50 per request. 

2. Statutory Basis 

Nasdaq believes that the proposed 

rule change is consistent with the 

provisions of Section 15A of the Act,7 in 

general, and with Section 15A(b)(5) of 

the Act,8 in particular, in that it 

provides for the equitable allocation of 

reasonable fees, dues, and other charges 

among members and issuers and other 

persons using any facility or system 

which the NASD operates or controls. 

Further, Nasdaq believes that the 

proposed fee structure for the new 

‘‘Query’’ function is reasonable because 

the new ‘‘Query’’ function provides 

more information per request than the 

old ‘‘Browse/Query’’ function. Nasdaq 

believes the new fee structure is also 

equitable because it applies to all users 

of the ‘‘Query’’ function on an equal 

basis. Although the fee for the new 

‘‘Query’’ function is more than the fee 

for the old ‘‘Browse/Query’’ function, 

Nasdaq believes its customers will 

benefit from an overall reduction in 

their costs because they will not incur 

additional incremental charges to view 

all of their trade reporting activity. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Nasdaq does not believe that the 

proposed rule change will impose any 

inappropriate burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments on the proposed 

rule change were neither solicited nor 

received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing proposed rule change 

has become immediately effective 

pursuant to Section 19(b)(3)(A)(ii) of the 

Act 9 and subparagraph (f)(2) of Rule 

19b–4 thereunder,10 in that it 

establishes or changes a due, fee or 

other charge imposed by Nasdaq. At any 

time within 60 days of the filing of such 

proposed rule change, the Commission 

may summarily abrogate such rule 

change if it appears to the Commission 

that such action is necessary or 

appropriate in the public interest, for 

the protection of investors, or otherwise 

in furtherance of the purposes of the 

Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASD–2005–127 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–9303. 

All submissions should refer to File 

Number SR–NASD–2005–127. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). 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 

Section. Copies of the filing also will be 

available for inspection and copying at 

the principal office of NASD. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NASD–2005–127 and 

should be submitted on or before 

December 21, 2005. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–23495 Filed 11–29–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52826; File No. SR–NYSE–

2005–67] 

Self-Regulatory Organizations; New 

York Stock Exchange, Inc.; Notice of 

Filing and Order Granting Accelerated 

Approval of Proposed Rule Change 

Relating to iShares Dow Jones U.S. 

Energy Sector Index Fund and iShares 

Dow Jones U.S. Telecommunications 

Sector Index Fund 

November 22, 2005. 

Pursuant to section 19(b)(1) of the 

Securities Exchange Act of 1934 (‘‘Act’’

or ‘‘Exchange Act’’),1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on September 30, 2005 the New York 

Stock Exchange, Inc. (‘‘NYSE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’ or ‘‘SEC’’) the proposed 

rule change as described in Items I and 

II 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 and is 

approving the proposal on an 

accelerated basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The NYSE proposes to list and trade 

the iShares Dow Jones U.S. Energy 

Sector Index Fund and iShares Dow 

Jones U.S. Telecommunications Sector 

Index Fund, both exchange-traded 

Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Notices 71875 

3 In 1996, the Commission approved section 

703.16 of the NYSE Listed Company Manual 

(‘‘Manual’’), which sets forth the rules related to the 

listing of ICUs. See Securities Exchange Act Release 

No. 36923 (March 5, 1996), 61 FR 10410 (March 13, 

1996) (SR–NYSE–95–23). In 2000, the Commission 

also approved the Exchange’s generic listing 

standards for listing and trading, or the trading 

pursuant to UTP, of ICUs under section 703.16 of 

the Manual and NYSE Rule 1100. See Securities 

Exchange Act Release No. 43679 (December 5, 

2000), 65 FR 77949 (December 13, 2000) (SR–

NYSE–00–46). 

4 iShares is a registered trademark of Barclays 

Global Investors, N.A. 

5The Trust is registered under the Investment 

Company Act of 1940 (15 U.S.C. 80a), (the 

‘‘Investment Company Act’’). On April 15, 2005, the 

Trust filed with the Commission a Registration 

Statement for the Funds on Form N–1A under the 

Securities Act of 1933 (15 U.S.C. 77a), and under 

the Investment Company Act relating to the Funds 

(File Nos. 333–92935 and 811–09729) (as amended, 

the ‘‘Registration Statement’’). 

On March 3, 2004, the Trust filed with the 

Commission an Amended and Restated Application 

for an Amended Order under sections 6(c) and 17(b) 

of the Investment Company Act and on September 

8, 2004, the Trust filed with the Commission a 

Second Amended and Restated Application to 

Amend Orders under sections 6(c) and 17(b) of the 

Investment Company Act for the purpose of 

exempting the Fund from various provisions of the 

Investment Company Act and the rules thereunder 

(the ‘‘Application’’). The Application requested that 

the Commission amend a prior Order received by 

the Advisor, the Trust and the Distributor on 

August 15, 2001, as amended (the ‘‘Prior Order’’). 

On October 5, 2004, the SEC acted on the 

Application by approving an order amending 

certain prior orders under section 6(c) of the 

Investment Company Act for an exemption from 

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

Investment Company Act and Rule 22c–1 under the 

Investment Company Act, and under sections 6(c) 

and 17(b) of the Investment Company Act for an 

exemption from sections 17(a)(1) and (a)(2) thereof. 

Investment Company Act Release No. 26626 

(October 5, 2004) (‘‘Amended Order’’). See also In 

the Matter of iShares Trust, et al., Investment 

Company Act Release No. 25111 (August 15, 2001) 

as amended by In the Matter of iShares, Inc., et al., 

Investment Company Act Release No. 25623 (June 

25, 2002) and In the Matter of iShares Trust, et al., 

Investment Company Act Release No. 26006 (April 

15, 2003). The Amended Order permits the Trust 

to offer the Funds and permits the Funds to invest 

in certain depository receipts. 

6 17 CFR 240.19b–4. 

7 15 U.S.C. 80b. 

8 15 U.S.C. 80a–1. 9The Exchange states that the information 

provided herein is based on information included 

in the application, Prior Order and the Prior 

Application as well as on the prospectus and 

Statement of Additional Information for the Funds. 

(See note 5, supra.) While the Advisor would 

manage the Funds, the Funds’ Board of Directors 

would have overall responsiblity for the Funds’

operations. The composition of the Board is, and 

would be, in compliance with the requirements of 

section 10 of the Investment Company Act. The 

Funds are subject to and must comply with Section 

303A.06 of the Manual, which requires that the 

Funds have an audit committee that complies with 

SEC Rule 10A–3, 17 CFR 240.10A–3. 10The Funds’ investment objectives, policiies and 

investment stategies will be fully disclosed in their 

prospectus (‘‘Prospectus’’) and statement of 

additional information (‘‘SAI’’). 

funds, which the Exchange denominates 

as Investment Company Units (‘‘ICUs’’). 

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 

NYSE included statements concerning 

the purpose of, and basis for, the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item III, below, and 

is set forth in sections A, B, and C 

below. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange has adopted listing 

standards applicable to ICUs that are 

consistent with the listing criteria 

currently used by other national 

securities exchanges, and trading 

standards pursuant to which the 

Exchange may either list and trade ICUs, 

or trade such ICUs on the Exchange on 

an unlisted trading privileges (‘‘UTP’’) 

basis.3

The Exchange now proposes to list 

and trade under Section 703.16 of the 

NYSE Listed Company Manual 

(‘‘Manual’’) and NYSE Rule 1100 et seq. 

shares of the iShares 4 Dow Jones U.S. 

Energy Sector Index Fund based on the 

Dow Jones U.S. Oil and Gas Index and 

iShares Dow Jones U.S. 

Telecommunications Sector Index Fund 

based on the Dow Jones 

Telecommunications Index 

(collectively, the ‘‘Funds’’). The Funds 

are a series of the iShares Trust (the 

‘‘Trust’’).5 The Funds are currently 

listed and traded on the American Stock 

Exchange LLC, and the issuer intends to 

move the listing of the Funds to the 

NYSE. As described below, the Funds 

do not meet the ‘‘generic’’ listing 

requirements of Section 703.16 of the 

Manual applicable to listing of ICUs 

(permitting listing in reliance upon Rule 

19b–4(e) under the Act) and cannot be 

listed without a filing pursuant to Rule 

19b–4 6 under the Act. Section 

703.16(B)(2)(c) provides that the most 

heavily weighted component stock may 

not exceed 25% of the weight of the 

index or portfolio, and the five most 

heavily weighted component stocks may 

not exceed 65% of the weight of the 

index or portfolio. As of September 23, 

2005, one stock in the Dow Jones U.S. 

Oil and Gas Index— Exxon Mobil 

Corp.—accounted for 31.91% of the 

index weight and thus exceeded the 

25% criterion. In addition, as of 

September 23, 2005, the five most 

heavily weighted stocks in the Dow 

Jones U.S. Telecommunications Sector 

Index exceeded the 65% weighting 

criterion. The following five stocks 

accounted for 83.24% of the index 

weight: Verizon Communications Inc. 

(24.17%), SBC Communications Inc. 

(21.32%), Sprint Nextel Corp. (18.60%), 

BellSouth Corp. (12.91%), and Alltel 

Corp. (6.24%). 

As set forth in detail below, the Funds 

will hold certain securities 

(‘‘Component Securities’’) selected to 

correspond generally to the performance 

of the Dow Jones U.S. Oil and Gas Index 

and the Dow Jones U.S. 

Telecommunications Sector Index (the 

‘‘Underlying Indexes’’), respectively. 

Each Fund 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 advisor to the Funds. 

The Advisor is registered under the 

Investment Advisers Act of 1940.7 The 

Advisor is the 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. (‘‘SEI ‘‘ or 

the ‘‘Distributor’’), a Pennsylvania 

corporation and broker-dealer registered 

under the Act, is the principal 

underwriter and distributor of Creation 

Unit Aggregations of iShares (see 

‘‘Issuance of Creation Units 

Aggregations,’’ below). The Distributor 

is not affiliated with the Exchange or the 

Advisor. 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 the Funds. The 

Exchange expects that performance of 

the Administrator’s duties and 

obligations will be conducted within the 

provisions of the Investment Company 

Act 8 and the rules thereunder. There is 

no affiliation between the Administrator 

and the Trust, the Advisor, or the 

Distributor. 

(a) Operation of the Funds 9

The investment objective of the Funds 

will be to provide investment results 

that correspond generally to the price 

and yield performance of the 

Underlying Indexes.10 In seeking to 

achieve their investment objective, the 

Funds will utilize ‘‘passive’’ indexing 

investment strategies. The Funds utilize 

a ‘‘representative sampling’’ strategy to 

track the applicable Underlying Index. 

A Fund utilizing a representative 

sampling strategy generally will hold a 

basket of the Component Securities of 

71876 Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Notices 

11 In order for the Funds to qualify for tax 

treatment as a RIC, they must meet several 

requirements under the Code. Among these is a 

requirement that, at the close of each quarter of the 

Funds’ taxable year, (1) at least 50% of the market 

value of the Funds’ total assets must be represented 

by cash items, U.S. government securities, 

securities of other RICs and other securities, with 

such other securities limited for the purpose of this 

calculation with respect to any one issuer to an 

amount not greater than 5% of the value of the 

Funds’ assets and not greater than 10% of the 

outstanding voting securities of such issuer; and (2) 

not more than 25% of the value of their total assets 

may be invested in securities of any one issuer, or 

two or more issuers that are controlled by the Funds 

(within the meaning of section 851(b)(4)(B) of the 

Code) and that are engaged in the same or similar 

trades or business (other than U.S. government 

securities of other RICs). 

12The Web site for the Funds, http:// 

www.iShares.com, contains detailed information on 

the performance and the tracking error for each 

Fund. Telephone conversation between Florence 

Harmon, Senior Special Counsel, Division of 

Market Regulation, Commission, and Michael 

Cavalier, Assistant General Counsel, NYSE, on 

November 15, 2005. 

13The price at which the Funds’ shares trade 

should be disciplined by arbitrage opportunities 

created by the ability to purchase or redeem shares 

of the Funds in Creation Unit Aggregations 

throughout the trading day. This should help 

ensure that the Funds’ shares will not trade at a 

material discount or premium to their net asset 

value or redemption value. 

14Both of the Funds hold securities and ADRs 

(for at least 90% of their assets) that are registered 

under Section 12 of the Exchange Act and listed on 

a national securities exchange or traded through the 

facilities of Nasdaq and that are ‘‘NMS stocks’’ as 

defined in Rule 600 of Regulation NMS of the 

Exchange Act. Telephone conversation between 

Florence Harmon, Senior Special Counsel, Division 

of Market Regulation, Commission, and Michael 

Cavalier, Assistant General Counsel, NYSE, on 

November 22, 2005. 

its Underlying Index, but it may not 

hold all of the Component Securities of 

its Underlying Index. The Application 

states that the representative sampling 

techniques that will be used by the 

Advisor to manage the Funds do not 

differ from the representative sampling 

techniques it uses to manage the funds 

that were the subject of the Prior Order. 

From time to time, adjustments may 

be made in the portfolio of the Funds in 

accordance with changes in the 

composition of the Underlying Indexes 

or to maintain compliance with 

requirements applicable to a ‘‘registered 

investment company’’ (‘‘RIC’’) under the 

Internal Revenue Code.11 For example, 

if at the end of a calendar quarter a 

Fund would not comply with the RIC 

diversification tests, the Advisor would 

make adjustments to the portfolio to 

ensure continued RIC status. In order to 

maintain RIC status, the Funds may not 

hold Underlying Index stocks in the 

same percentage weightings as in the 

Underlying Index, and the individual 

stock weightings in such indexes could 

be more concentrated than the index 

securities held by the Funds. 

The Exchange states that an index is 

a theoretical financial calculation, while 

each Fund is an actual investment 

portfolio. The performance of the Funds 

and the Underlying Indexes will vary 

somewhat due to transaction costs, 

market impact, corporate actions (such 

as mergers and spin-offs) and timing 

variances. It is expected that, over time, 

the correlation between each Funds’

performance and that of its respective 

Underlying Index, before fees and 

expenses, will be 95% or better. A figure 

of 100% would indicate perfect 

correlation. Any correlation of less than 

100% is called ‘‘tracking error.’’ 12 As 

stated in the Application under the 

Investment Company Act applicable to 

the Funds, the Funds are expected to 

have a tracking error relative to the 

performance of the applicable 

Underlying Index of no more than 5%. 

The Funds’ board of directors reviews 

the tracking error of the Funds on a 

quarterly basis and, based upon its 

review, will consider if any action might 

be appropriate.13

The Funds will not concentrate their 

investments (i.e., hold 25% or more of 

their assets) in a particular industry or 

group of industries, except that the 

Funds will concentrate their 

investments to approximately the same 

extent that the respective Underlying 

Index is so concentrated. For purposes 

of this limitation, securities of the U.S. 

Government (including its agencies and 

instrumentalities), repurchase 

agreements collateralized by U.S. 

Government securities, and securities of 

state or municipal governments and 

their political subdivisions are not 

considered to be issued by members of 

any industry. 

Each Fund will invest at least 90% of 

its assets in the securities of its 

Underlying Index or in American 

Depositary Receipts (‘‘ADRs’’) based on 

securities in the Underlying Index. A 

fund may invest the remainder of its 

assets in securities not included in its 

Underlying Index, which BGFA believes 

will help the Fund track its Underlying 

Index. For example, a Fund may invest 

in securities not included in its 

Underlying Index in order to reflect 

various corporate actions (such as 

mergers) and other changes in its 

Underlying Index (such as 

reconstitutions, additions and 

deletions). A Fund also may invest its 

other assets in futures contracts, options 

on futures contracts, options, and swaps 

related to its Underlying Index, as well 

as cash and cash equivalents, including 

shares of money market funds affiliated 

with BGFA. 

The Exchange believes that these 

requirements and policies prevent the 

Funds from being excessively weighted 

in any single security or small group of 

securities.14

(b) Description of the Funds and the 

Underlying Indexes 

Index Description 

The Dow Jones U.S. Oil and Gas Index 

measures the performance of the oil and 

gas sector of the U.S. equity market. The 

Index includes companies in the 

following sectors: oil and gas producers 

and oil equipment, services and 

distribution. The Fund will concentrate 

its investments in a particular industry 

or group of industries to approximately 

the same extent as the Index is so 

concentrated. As of the close of business 

on December 17, 2004, the Index was 

concentrated in the integrated oil and 

gas industry group which comprised 

56% of the market capitalization of the 

Index. 

As of September 23, 2005, the Dow 

Jones U.S. Oil and Gas Index’s top three 

holdings were Exxon Mobil Corp., 

Chevron Corp., and ConocoPhillips. The 

Index’s top industries were Energy 

Equipment and Services, and Oil, Gas & 

Consumable Fuels. 

As of September 23, 2005, the Dow 

Jones U.S. Oil and Gas Index 

components had a total market 

capitalization of approximately $1.27 

trillion. The average total market 

capitalization was approximately $15.3 

billion; the lowest market capitalization 

figure was $529.6 million. The ten 

largest constituents represented 

approximately 68.2% of the Index 

weight while the five highest weighted 

stocks represented 56.4% of the Index 

weight. During the past two months 

(from September 23, 2005), the five 

highest weighted stocks had an average 

daily trading volume in excess of 8.1 

million shares. From March 23, 2005 

through September 23, 2005, 91.8% of 

the component stocks traded at least 1.8 

million shares. During August 23, 2005 

through September 23, 2005, the 

minimum monthly trading volume for 

the lowest performing Index component 

was at least 1.9 million shares. 

The Dow Jones U.S. 

Telecommunications Sector Index 

measures the performance of the 

telecommunications sector of the U.S. 

equity market. The Index includes 

companies in the following sectors: 

fixed-line telecommunications and 

mobile telecommunications. 

The Fund will concentrate its 

investments in a particular industry or 

group of industries to approximately the 

same extent as the Index is so 

concentrated. As of the close of business 

Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Notices 71877 

15Telephone conversation between Florence 

Harmon, Senior Special Counsel, Division of 

Market Regulation, Commission, and Michael 

Cavalier, Assistant General Counsel, NYSE, on 

November 22, 2005. 

16 Id. 

17See infra note 24 and accompanying text. 

18As of September 20, 2005, a Creation Unit 

Aggregation for the iShares Dow Jones Energy 

Sector Index Fund and the iShares Dow Jones 

Telecommunications Sector Index Fund had a value 

of approximately $4,536,000 and $1,179,500, 

respectively. 

on December 12, 2004, the Index was 

concentrated in the fixed line 

telecommunications industry group, 

which comprised 84% of the market 

capitalization of the Index. 

As of September 23, 2005, the Dow 

Jones U.S. Telecommunications Sector 

Index’s top three holdings were Verizon 

Communications Inc., SBC 

Communications Inc., and Sprint Nextel 

Corp. The Index’s top industry was 

Telecommunication Services. 

As of September 23, 2005, the Dow 

Jones U.S. Telecommunications Sector 

Index components had a total market 

capitalization of approximately $368.2 

billion. The average total market 

capitalization was approximately $16.7 

billion; the lowest market capitalization 

figure was $209.3 million. The ten 

largest constituents represented 

approximately 93.5% of the Index 

weight while the five highest weighted 

stocks represented approximately 83.3% 

of the Index weight. For July 23, 2005 

through September 23, 2005, the five 

highest weighted stocks had an average 

daily trading volume in excess of 7.1 

million shares. From March 23, 2005 

through September 23, 2005, 99.9% of 

the component stocks traded at least 

850,000 shares. During August 23, 2005 

through September 23, 2005, the 

minimum monthly trading volume for 

the lowest performing Index component 

was at least 1.2 million shares. 

The Dow Jones Indexes 

Component Selection Criteria. 

Securities of companies listed on a U.S. 

exchange (such as the NYSE, the Amex 

or the Nasdaq) are considered for 

inclusion in the indexes, with the 

following general rules and exceptions. 

Stocks must have a minimum trade 

history of six months on the rebalancing 

date to be eligible for inclusion. Foreign 

issues, including ADRs and GDRs, noncommon equity issues such as preferred 

stocks, convertible notes, warrants, 

rights, closed-end funds, trust receipts, 

limited liabilities companies, royalty 

trusts, units, limited partnerships, overthe-counter bulletin boards and pink 

sheet stocks generally are not eligible for 

inclusion in the indexes. 

Issue Changes. Each index is 

reviewed and rebalanced quarterly to 

maintain accurate representation of the 

market segment represented by the 

Index. Securities that leave an index 

between reconstitution dates are not 

replaced. Thus, the number of securities 

in an index between rebalancing dates 

fluctuates according to corporate 

activity. When a stock is acquired, 

delisted, or moves to the pink sheets or 

OTC bulletin board, the stock is deleted 

from the index. The only additions 

between rebalancing dates are as a result 

of spin-offs. 

Index Maintenance. Maintaining the 

Dow Jones Indexes includes monitoring 

and completing the adjustments for 

additions and deletions to each Index, 

share changes, stock splits, stock 

dividends, and stock price adjustments 

due to restructuring and spin-offs. 

Generally, each component security in 

an Index is limited to a maximum 

market capitalization of 25% of the 

Index weight, and sum of the weights of 

all component securities greater than 

5% of the index is limited to 50% of the 

Index total. If components fail either 

rule, their market capitalization will be 

reduced to meet the set guidelines. 

However, as noted, the Indexes (upon 

which the Funds are based) are subsets 

of the Dow Jones Total Market Index 

and contain components whose 

weighting exceeds these general 

parameters.15

The Dow Jones U.S. Oil & Gas Index 

is a subset of the Dow Jones U.S. Total 

Market Index. The Index is 

capitalization weighted and includes 

companies in the oil and gas industries 

of the Dow Jones U.S. Total Market 

Index.16 The component stocks are 

weighted according to the total market 

value of their outstanding shares. The 

impact of a component’s price change is 

proportional to the issue’s total market 

value, which is the share price 

multiplied by the number of shares 

outstanding. The Index is adjusted to 

reflect changes in capitalization 

resulting from mergers, acquisitions, 

stock rights, substitutions and other 

capital events. 

The Dow Jones U.S. 

Telecommunications Index is also a 

subset of the Dow Jones U.S. Total 

Market Index. The Index is 

capitalization-weighted and includes 

only companies in the 

telecommunications industry of the 

Dow Jones U.S. Total Market Index. The 

component stocks are weighted 

according to the total market value of 

their outstanding shares. The impact of 

a component’s price change is 

proportional to the issue’s total market 

value, which is the share price 

multiplied by the number of shares 

outstanding. The Index is adjusted to 

reflect changes in capitalization 

resulting from mergers, acquisitions, 

stock rights, substitutions and other 

capital events. 

The Dow Jones Indexes are calculated 

continuously, and real-time index 

values are available from major data 

vendors at least every 15 seconds during 

the hours that the Shares trade on the 

Exchange.17

(c) Issuance of Creation Unit 

Aggregations 

(i) In General. Shares of the Funds 

(the ‘‘iShares’’) will be issued on a 

continuous offering basis in groups of 

50,000 iShares, or multiples thereof. 

These ‘‘groups’’ of shares are called 

‘‘Creation Unit Aggregations.’’ The 

Funds will issue and redeem iShares 

only in Creation Unit Aggregations.18

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 NAV per share of the Funds is 

determined as of the close of the regular 

trading session on the Exchange on each 

day that the Exchange is open. The 

Trust sells Creation Unit Aggregations of 

the Funds only on business days at the 

next determined NAV of the Fund. 

Creation Unit Aggregations generally 

will be issued by the Funds in exchange 

for the in-kind deposit of equity 

securities designated by the Advisor to 

correspond generally to the price and 

yield performance of the Fund’s 

Underlying Index (the ‘‘Deposit 

Securities’’) and a specified cash 

payment. Creation Unit Aggregations 

generally will be redeemed by the Fund 

in exchange for portfolio securities of 

the Fund (‘‘Fund Securities’’) and a 

specified cash payment. 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. 

All orders to purchase iShares in 

Creation Unit Aggregations must be 

placed through an Authorized 

Participant. An Authorized Participant 

must be either a ‘‘Participating Party,’’

i.e., a broker-dealer or other participant 

in the clearing process through the 

National Securities Clearing Corporation 

(‘‘NSCC’’) Continuous Net Settlement 

System (the ‘‘Clearing Process’’), a 

clearing agency that is registered with 

the SEC, or a Depository Trust Company 

(‘‘DTC’’) participant, and in each case, 

must enter into a Participant Agreement. 

The Funds impose a transaction fee in 

connection with the issuance and 

71878 Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Notices 

19BGFA will similarly make available the identity 

of the Fund securities for redemption requests. See 

‘‘Redemption of iShares,’’ supra. 

20Telephone conversation between Florence 

Harmon, Senior Special Counsel, Division of 

Market Regulation, Commission, and Michael 

Cavalier, Assistant General Counsel, NYSE, on 

November 15, 2005. 

21The Exchange will commence delisting 

proceedings of a series of ICUs if the value of the 

index or portfolio of securities on which the series 

is based is no longer calculated or available. See 

redemption of iShares to offset transfer 

and other transaction costs. The 

transaction fee in connection with the 

issuance and redemption of Creation 

Unit Aggregations of the Funds are 

estimated to be approximately $500–

$2000 for the iShares Dow Jones Energy 

Sector Index Fund and between $250–

$1000 for the iShares Dow Jones 

Telecommunications Sector Index 

Fund. 

(ii) In-Kind Deposit of Portfolio 

Securities. Payment for Creation Unit 

Aggregations will be made by the 

purchasers generally by an in-kind 

deposit with the applicable 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 

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 ‘‘Fund Deposit.’’

The Advisor will make available to the 

market through the NSCC on each 

business day, prior to the opening of 

trading on the Exchange (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 Fund Deposit (based on 

information at the end of the previous 

business day) for each Fund. The Fund 

Deposit will be applicable to the 

relevant Fund (subject to any 

adjustments to the Balancing Amount, 

as described below) in order to effect 

purchases of Creation Unit Aggregations 

of such Fund until such time as the 

next-announced Fund Deposit 

composition is made available. 

The identity and number of shares of 

the Deposit Securities required for the 

Fund Deposit for each 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 Underlying 

Index. In addition, the Trust reserves 

the right 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 that may not be 

available in sufficient quantity for 

delivery or that may not otherwise be 

eligible for transfer. The Trust also 

reserves the right to permit or require a 

‘‘cash in lieu’’ amount where the 

delivery of the Deposit Security by the 

Authorized Participant would be 

restricted under the securities laws or 

where the delivery of the Deposit 

Security to the Authorized Participant 

would result in the disposition of the 

Deposit Security by the Authorized 

Participant becoming restricted under 

the securities laws, or in certain other 

situations. The adjustments described 

above will reflect changes known to the 

Advisor on the date of announcement to 

be in effect by the time of delivery of the 

Fund Deposit, in the composition of the 

applicable Underlying Index or 

resulting from certain corporate actions. 

(d) Redemption of iShares 

Creation Unit Aggregations of the 

Funds will be redeemable at the NAV 

next determined after receipt of a 

request for redemption. Creation Unit 

Aggregations of the Funds generally will 

be redeemed in-kind, together with a 

balancing cash payment (although, as 

described below, Creation Unit 

Aggregations may sometimes be 

redeemed for cash). The value of the 

Funds’ redemption payments on a 

Creation Unit Aggregation basis will 

equal the NAV per the appropriate 

number of iShares of the Funds. 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 Funds. Redemption orders 

must be placed by or through an 

Authorized Participant. 

Shares may be redeemed only in 

Creation Unit Aggregations at their NAV 

next determined after receipt of a 

redemption request in proper form by 

the Fund through IBT and only on a 

business day. A Fund will not redeem 

shares in amounts less than Creation 

Unit Aggregations. 

With respect to each Fund, BGFA, 

through the NSCC and through the 

Distributor, makes available prior to the 

opening of business on the Exchange 

(currently 9:30 a.m., Eastern time) on 

each business day, the identity of the 

Fund securities that will be applicable 

(subject to possible amendment or 

correction) to redemption requests 

received in proper form (as described 

below) on that day (‘‘Fund Securities’’). 

Fund Securities received on redemption 

may not be identical to Deposit 

Securities that are applicable to 

creations of Creation Unit Aggregations. 

Unless cash redemptions are available 

or specified for a Fund, the redemption 

proceeds for a Creation Unit 

Aggregation generally consist of Fund 

Securities—as announced on the 

business day of the request for 

redemption received in proper form—

plus cash in an amount equal to the 

difference between the NAV of the 

shares being redeemed, as next 

determined after a receipt of a request 

in proper form, and the value of the 

Fund Securities (the ‘‘Cash Redemption 

Amount’’), less a redemption 

transaction fee as noted above. In the 

event that the Fund Securities have a 

value greater than the NAV of the 

shares, a compensating cash payment 

equal to the difference is required to be 

made by or through an Authorized 

Participant by the redeeming 

shareholder. 

(e) Availability of Information Regarding 

iShares and the Underlying Index 

Prior to the opening of business on 

the Exchange (currently 9:30 a.m. 

Eastern time) on each business day, 

BGFA, through NSCC, will make 

available the list of names and amount 

of each security constituting the current 

Deposit Securities of the Fund Deposit 

(subject to possible amendment or 

correction) and the Balancing Amount 

effective as of the previous business 

day, per outstanding share of each 

Fund.19

The NAV for the Fund will be 

calculated and disseminated daily. The 

Funds’ NAV will be published in a 

number of places, including http:// 

www.iShares.com and on the 

Consolidated Tape.20

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 

in U.S. dollars, on a per iShare basis 

(the ‘‘Intra-day Optimized Portfolio 

Value’’ or ‘‘IOPV’’) will be calculated by 

a third party independent of the issuer 

(the ‘‘Value Calculator’’), at least every 

15 seconds during the Exchange’s 

regular trading hours and disseminated 

at least every 15 seconds on the 

Consolidated Tape. In addition, the 

values of the Underlying Indexes will be 

disseminated by one or more major 

market vendors at least every 15 

seconds during the Exchange’s regular 

trading hours.21 The last sale prices of 

Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Notices 71879 

section 703.16 of the Manual. Section 703.16 

requires that, for ICUs listed in reliance upon Rule 

19b–4(e) under the Act, the underlying index value 

and the IOPV be disseminated by one or more major 

market data vendors or over the consolidated tape 

at least every 15 seconds. See Release No. 34–52081 

(July 20, 2005), 70 FR 43488 (July 27, 2005) (SR–

NYSE–2005–44). 

22See infra note 24 and accompanying text. 

23 15 U.S.C. 80a–24. See In the Matter of iShares, 

Inc., et al., Investment Company Act Release No. 

25623 (June 25, 2002). 

Fund shares traded in the secondary 

market will be disseminated on the 

Consolidated Tape on a real-time basis. 

The IOPV reflects the current value of 

the Deposit Securities and the Balancing 

Amount. Since the Funds will utilize a 

representative sampling strategy, the 

IOPV may not reflect the value of all 

securities included in the Underlying 

Indexes. In addition, the IOPV does not 

necessarily reflect the precise 

composition of the current portfolio of 

securities held by the Funds at a 

particular point in time. Therefore, the 

IOPV on a per Fund share basis 

disseminated during the Exchange’s 

trading hours should not be viewed as 

a real time update of the NAV of the 

Funds, which is calculated only once a 

day. While the IOPV disseminated by 

the Exchange at 9:30 a.m. is expected to 

be generally very close to the most 

recently calculated Fund NAV on a per 

Fund share basis, it is possible that the 

value of the portfolio of securities held 

by each Fund may diverge from the 

Deposit Securities values during any 

trading day. In such case, the IOPV will 

not precisely reflect the value of each 

Fund’s portfolio. 

However, during the trading day, the 

IOPV can be expected to closely 

approximate the value per Fund share of 

the portfolio of securities for each Fund 

except under unusual circumstances 

(e.g., in the case of extensive 

rebalancing of multiple securities in a 

Fund at the same time by the Advisor). 

The Exchange believes that 

dissemination of the IOPV based on the 

Deposit Securities provides additional 

information regarding the Funds that is 

not otherwise available to the public 

and is useful to professionals and 

investors in connection with Fund 

shares trading on the Exchange or the 

creation or redemption of Fund shares. 

As noted, the Dow Jones Indexes are 

calculated continuously, and real-time 

index values are available from major 

data vendors at least every 15 seconds 

during the hours that the Shares trade 

on the Exchange.22

Other information on the Funds, 

regarding NAV, premium or discount to 

NAV, distributions, shares outstanding 

total returns, tracking error, holdings 

and other information is available on 

http://www.iShares.com. 

(f) Dividends and Distributions 

General Policies. Accrued dividends 

from net investment income, if any, are 

declared and paid at least annually by 

each Fund. Distributions of net realized 

securities gains, if any, generally are 

declared and paid once a year, but the 

Trust may make distributions on a more 

frequent basis for certain Funds. The 

Trust reserves the right to declare 

special distributions if, in its reasonable 

discretion, such action is necessary or 

advisable to preserve the status of each 

Fund as a RIC or to avoid imposition of 

income or excise taxes on undistributed 

income. 

Dividends and other distribution in 

shares are distributed on a pro rata basis 

to Beneficial Owners of such shares. 

Dividend payments are made through 

DTC Participants and Indirect 

Participants to Beneficial Owners then 

of record with proceeds received from 

the Funds. 

Dividend Reinvestment Service. No 

dividend reinvestment service is 

provided by the Trust. Broker-dealers 

may make available the DTC book-entry 

Dividend Reinvestment Service for use 

by Beneficial Owners of Funds for 

reinvestment of their dividend 

distributions. Beneficial Owners should 

contact their broker to determine the 

availability and costs of the service and 

the details of participation therein. 

Brokers may require Beneficial Owners 

to adhere to specific procedures and 

timetables. If this service is available 

and used, dividend distributions of both 

income and realized gains will be 

automatically reinvested in additional 

whole shares of the same Fund 

purchased in the secondary market. 

Beneficial owners of the Funds will 

receive all of the statements, notices, 

and reports required under the 

Investment Company Act and other 

applicable laws. They will receive, for 

example, annual and semi-annual 

reports, written statements 

accompanying dividend payments, 

proxy statements, annual notifications 

detailing the tax status of distributions, 

IRS Form 1099–DIVs, etc. Because the 

Trust’s records reflect ownership of 

iShares by DTC only, the Trust will 

make available applicable statements, 

notices, and reports to the DTC 

Participants who, in turn, will be 

responsible for distributing them to the 

beneficial owners. 

(g) Other Issues 

(i) Criteria for Initial and Continued 

Listing. The Funds are subject to the 

criteria for initial and continued listing 

of ICUs in section 703.16 of the Manual. 

A minimum of two Creation Units 

(100,000 iShares) was required to be 

outstanding at the start of trading. This 

minimum number of shares of each 

Fund required to be outstanding at the 

start of trading will be comparable to 

requirements that have been applied to 

previously traded series of ICUs. The 

Exchange notes that the number of 

shares outstanding as of September 20, 

2005 for the iShares Dow Jones U.S. 

Energy Sector Index Fund and the Dow 

Jones U.S. Telecommunications Sector 

Index Fund were 9,800,000 and 

22,150,000 shares, respectively. 

(ii) Original and Annual Listing Fees. 

The original listing fees applicable to 

the Funds for listing on the Exchange is 

$5,000 for each Fund, and the 

continuing fees will be $2,000 for each 

Fund. 

(iii) Stop and Stop Limit Orders. 

Commentary .30 to NYSE Rule 13 

provides that stop and stop limit orders 

in an ICU shall be elected by a 

quotation, but specifies that if the 

electing bid on an offer is more than 

0.10 points away from the last sale and 

is for the specialist’s dealer account, 

prior Floor Official approval is required 

for the election to be effective. This rule 

applies to ICUs generally. 

(iv) Rule 460.10. NYSE Rule 460.10 

generally precludes certain business 

relationships between an issuer and the 

specialist or its affiliates in the issuer’s 

securities. Exceptions in the Rule permit 

specialists in Fund shares to enter into 

Creation Unit transactions through the 

Distributor to facilitate the maintenance 

of a fair and orderly market. A specialist 

or affiliate Creation Unit transaction 

may only be effected on the same terms 

and conditions as any other investor, 

and only at the net asset value of the 

Fund shares. A specialist or affiliate 

may acquire a position in excess of 10% 

of the outstanding issue of the Funds’

shares, provided, however, that a 

specialist registered in a security issued 

by an investment company may 

purchase and redeem the investment 

company unit or securities that can be 

subdivided or converted into such unit 

from the investment company as 

appropriate to facilitate the maintenance 

of a fair and orderly market in the 

subject security. 

(v) Prospectus or Product Description 

Delivery. The Commission has granted 

the Trust an exemption from certain 

prospectus delivery requirements under 

section 24(d) of the Investment 

Company Act.23 Any product 

description used in reliance on the 

section 24(d) exemptive order will 

71880 Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Notices 

24 In the even an Index value of IOPV is no longer 

calculated or disseminated, the Exchange would 

immediately contact the Commission to discuss 

measures that may be appropriate under the 

circumstances. Telephone conversation between 

Florence Harmon, Senior Special Counsel, Division 

of Market Regulation, Commission, and Michael 

Cavalier, Assistant General Counsel, NYSE, on 

November 22, 2005. 25 15 U.S.C. 78f(b)(5). 

comply with all representations made 

therein and all conditions thereto. The 

Exchange, in an Information Memo 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 the 

Funds and will refer members and 

member organizations to NYSE Rule 

1100(b). The Information Memo will 

also advise members and member 

organizations that delivery of a 

prospectus to customers in lieu of a 

product description would satisfy the 

requirements of NYSE Rule 1100(b). 

(vi) Information Memo. The Exchange 

will distribute an Information Memo to 

its members in connection with the 

trading of the Funds. The Memo will 

discuss the special characteristics and 

risks of trading this type of security. 

Specifically, the Memo, among other 

things, will discuss what the Funds are, 

how the Funds’ shares are created and 

redeemed, the requirement that 

members and member firms deliver a 

prospectus or product description to 

investors purchasing shares of the 

Funds prior to or concurrently with the 

confirmation of a transaction, applicable 

Exchange rules, dissemination 

information, trading information and 

the applicability of suitability rules 

(including NYSE Rule 405). The circular 

will also discuss exemptive, no-action 

and interpretive relief granted by the 

Commission certain rules under the Act. 

(vii) Trading Halts. In order to halt the 

trading of the Funds, the Exchange may 

consider, among other things, factors 

such as the extent to which trading is 

not occurring in underlying security(s) 

and whether other unusual conditions 

or circumstances detrimental to the 

maintenance of a fair and orderly 

market are present. In addition, trading 

in the Funds’ shares is subject to trading 

halts caused by extraordinary market 

volatility pursuant to NYSE Rule 80B. 

The Exchange will halt trading in a 

Fund if the Index value or IOPV 

applicable to such Fund is no longer 

calculated or disseminated.24

(viii) Due Diligence/Suitability. The 

Exchange represents that the 

Information Memo to members will 

note, for example, Exchange 

responsibilities, including that before an 

Exchange member, member 

organization, or employee thereof 

recommends a transaction in the Funds, 

a determination must be made that the 

recommendation is in compliance with 

all applicable Exchange and Federal 

rules and regulations, including due 

diligence obligations under NYSE Rule 

405 (Diligence as to Accounts). 

(ix) Purchases and Redemptions in 

Creation Unit Size. In the Memo 

referenced above, members and member 

organizations will be informed that 

procedures for purchases and 

redemptions of shares of the Funds in 

Creation Unit Size are described in the 

Funds’ Prospectus and SAI, and that 

shares of the Funds are not individually 

redeemable but are redeemable only in 

Creation Unit Size aggregations or 

multiples thereof. 

(x) Surveillance. Exchange 

surveillance procedures applicable to 

trading in the proposed iShares are 

comparable to those applicable to other 

ICUs currently trading on the Exchange. 

The Exchange represents that its 

surveillance procedures are adequate to 

properly monitor the trading of the 

Funds. 

(xi) Hours of Trading/Minimum Price 

Variation. The Funds will trade on the 

Exchange until 4:15 p.m. (Eastern time). 

The minimum price variation for 

quoting will be $.01. 

2. Statutory Basis 

NYSE believes that the proposed rule 

change is consistent with section 6(b)(5) 

of the Act 25 requiring that an exchange 

have rules that are designed, among 

other things, to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to, and 

perfect the mechanism of a free and 

open market and, in general, to protect 

investors and the public interest. 

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 that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has neither solicited 

nor received written comments on the 

proposed rule change. 

III. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSE–2005–67 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–9303. 

All submissions should refer to File 

Number SR–NYSE–2005–67. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). 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 also will be 

available for inspection and copying at 

the principal office of the NYSE. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NYSE–2005–67 and should 

be submitted on or before December 21, 

2005. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of 

Proposed Rule Change 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder, 

Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Notices 71881 

26 In approving this proposal, the Commission has 

considered its impact on efficiency, competition, 

and capital formation. 15 U.S.C. 78c(f). 

27 15 U.S.C. 78f(b)(5). 

28The Commission notes that, as is the case with 

similar previously approved exchange traded funds, 

investors in the Fund can redeem shares in 

Creation-Unit-size aggregations only. See, e.g., 

Securities Exchange Act Release Nos. 43679 

(December 5, 2000), 65 FR 77949 (December 13, 

2000) (File No. SR–NYSE–00–46); 50505 (October 8, 

2004), 69 FR 61280 (October 15, 2004) (File No. SR–

NYSE–2004–55); 50189 (August 12, 2004), 69 FR 

51723 (August 20, 2004) (File No. SR–Amex–2004–

05); 52178 (July 29, 2005), 70 FR 46244 (August 9, 

2005) (File No. SR–NYSE–2005–41). 

29 15 U.S.C. 78s(b)(2). 

30NYSE Rule 405 generally requires that 

members use due diligence to learn the essential 

facts relative to every customer, order or account 

accepted. 

31See discussion under section II.A.1(g)(vi) 

‘‘Operation of the Funds,’’ above. The Exchange has 

represented that the information memo will also 

discuss exemptive, no-action, and interpretive relief 

granted by the Commission from certain rules under 

the Act. 

32Prior to commencement of trading, the 

Exchange states that it will issue an Information 

Memo informing members and member 

organizations of the characteristics of the Fund and 

of applicable Exchange rules, as well as of the 

requirements of NYSE Rule 405 (Diligence as to 

Accounts). 

33 15 U.S.C. 78s(b)(2). 

34 15 U.S.C. 78s(b)(5). 

35 15 U.S.C. 78s(b)(2). 

36 17 CFR 200.30–3(a)(12). 

applicable to a national securities 

exchange.26 In particular, the 

Commission finds that the proposed 

rule change is consistent with section 

6(b)(5) of the Act 27 and will promote 

just and equitable principles of trade, 

and facilitate transactions in securities, 

and, in general, protect investors and 

the public interest. 

The Commission believes that the 

proposed rule change raises no issues 

that have not been previously 

considered by the Commission.28 The 

Fund is similar in structure and 

operation to exchange-traded index 

funds that the Commission has 

previously approved for listing and 

trading on national securities exchanges 

under section 19(b)(2) of the Act.29

Further, with respect to each of the 

following key issues, the Commission 

believes that the Fund satisfies 

established standards. 

A. Surveillance 

Given the market capitalization and 

liquidity of the Underlying Indexes and 

Funds’ component securities, the 

Commission does not believe that the 

Funds’ shares will be susceptible to 

manipulation, despite the concentration 

of individual components. Nevertheless, 

the Exchange represents that its 

surveillance procedures are adequate to 

properly monitor the trading of the 

Funds, taking into account the 

concentration of the individual 

components. The Commission expects 

the Exchange to employ adequate 

surveillance for detecting manipulations 

of both the Shares and the underlying 

components, especially given the 

concentration of individual 

components. 

B. Dissemination of Fund Information 

With respect to pricing, once each 

day, the NAV for the Fund will be 

calculated and disseminated by IBT, to 

various sources, including the NYSE, 

and made available on http:// 

www.iShares.com and the Consolidated 

Tape. Also, during the Exchange’s 

regular trading hours, the IOPV 

Calculator will determine and 

disseminate at least every 15 seconds 

the IOPV for each Fund, and the Index 

values will be calculated and 

disseminated at least every 15 seconds. 

The Commission notes that a variety 

of additional information about each 

Fund will be readily available. 

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 

Exchange. Information on the Funds, 

regarding NAV, premium or discount to 

NAV, distributions, shares outstanding 

total returns, tracking error, holdings 

and other information is available on 

http://www.iShares.com. Also, the 

closing prices of the Fund’s Deposit 

Securities are available from, as 

applicable, the relevant exchanges, 

automated quotation systems, published 

or other public sources in the relevant 

country, or on-line information services. 

Based on the representations made in 

the NYSE proposal, the Commission 

believes that pricing and other 

important information about the Fund is 

adequate and consistent with the Act. 

C. Information Memorandum 

The Exchange represents that it will 

circulate an Information Memorandum 

detailing applicable prospectus and 

product description delivery 

requirements. The memo will also 

discuss exemptive, no-action and 

interpretive relief granted by the 

Commission from certain rules under 

the Act. The memo also will address 

NYSE members’ responsibility to 

deliver a prospectus or product 

description to all investors (in 

accordance with NYSE Rule 1100(b)) 

and highlight the characteristics of the 

Funds. The memo will also remind 

members of their suitability obligations, 

including NYSE Rule 405 (Diligence as 

to Accounts).30 For example, the 

Information Memo will also inform 

members and member organizations that 

Fund shares are not individually 

redeemable, but are redeemable only in 

Creation-Unit-size aggregations or 

multiples thereof as set forth in the 

Fund Prospectus and SAI.31 The 

Commission believes that the disclosure 

included in the information memo is 

appropriate and consistent with the Act. 

D. Listing and Trading 

The Commission finds that adequate 

rules and procedures exist to govern the 

listing and trading of the Fund’s shares. 

Fund shares will be deemed equity 

securities subject to NYSE rules 

governing the trading of equity 

securities, including, among others, 

rules governing trading halts, 

responsibilities of the specialist, 

account opening and customer 

suitability requirements,32 and the 

election of stop and stop limit orders. 

In addition, the Exchange states that 

iShares are subject to the criteria for 

initial and continued listing of ICUs in 

section 703.16 of the NYSE Manual. The 

Commission believes that the listing and 

delisting criteria for Fund shares should 

help to ensure that a minimum level of 

liquidity will exist in the Fund to allow 

for the maintenance of fair and orderly 

markets. 

E. Accelerated Approval 

The Commission finds good cause, 

pursuant to section 19(b)(2) of the Act,33

for approving the proposed rule change 

prior to the thirtieth day after the date 

of publication of notice in the Federal 

Register. The Commission notes that the 

proposal is consistent with the listing 

and trading standards in NYSE Rule 

703.16 (ICUs). The Funds are 

substantially identical in structure to 

other iShares Funds, which have an 

established and active trading history on 

the NYSE and other exchanges. The 

Commission does not believe that the 

proposed rule change raises novel 

regulatory issues. 

Accordingly, the Commission finds 

that there is good cause, consistent with 

section 6(b)(5) of the Act,34 to approve 

the proposal on an accelerated basis. 

V. Conclusion 

It Is Therefore Ordered, pursuant to 

section 19(b)(2) of the Act, that the 

proposed rule change (SR–NYSE–2005–

67), is hereby approved on an 

accelerated basis.35

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.36

71882 Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Notices 

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–23496 Filed 11–29–05; 8:45 am] 

BILLING CODE 8010–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

Notice of Passenger Facility Charge 

(PFC) Approvals and Disapprovals 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Monthly Notice of PFC 

Approvals and Disapprovals. In June 

2005, there were six applications 

approved. This notice also includes 

information on three applications, two 

approved in November 2004 and one 

approved in May 2005, inadvertently 

left off the November 2004 and May 

2005 notices, respectively. Additionally, 

16 approved amendments to previously 

approved applications are listed. 

SUMMARY: The FAA publishes a monthly 

notice, as appropriate, of PFC approvals 

and disapprovals under the provisions 

of the Aviation Safety and Capacity 

Expansion Act of 1990 (Title IX of the 

Omnibus Budget Reconciliation Act of 

1990) (Pub. L. 101–508) and Part 158 of 

the Federal Aviation Regulations (14 

CFR part 158). This notice is published 

pursuant to paragraph d of § 158.29. 

PFC Applications Approved 

Public Agency: City of Des Moines, 

Iowa. 

Application Number: 04–07–C–00–

DSM. 

Application Type: Impose and use a 

PFC. 

PFC Level: $4.50. 

Total PFC Revenue Approved in This 

Decision: $3,957,500. 

Earliest Charge Effective Date: April 1, 

2008. 

Estimated Charge Expiration Date: 

April 1, 2009. 

Class of Air Carriers Not Required To 

Collect PFC’s: Part 135 air taxi/ 

commercial operators. 

Determination: Approved. Based on 

information contained in the public 

agency’s application, the FAA has 

determined that the proposed class 

accounts for less than 1 percent of the 

total annual enplanements at Des 

Moines International Airport. 

Brief Description of Projects Approved 

for Collection and Use: 

Replace snow removal equipment and 

airfield snow broom. 

Acquire snow removal equipment and 

airfield snow broom. 

Replace aircraft rescue and 

firefighting vehicle. 

Decision Date: November 30, 2004. 

FOR FURTHER INFORMATION CONTACT: 

Lorna K. Sandridge, Central Region 

Airports Division, (816) 329–2641. 

Public Agency: City of Columbia, 

Missouri. 

Application Number: 04–02–U–00–

COU. 

Application Type: Use PFC revenue. 

PFC Level: $4.50. 

Total PFC Revenue To Be Used in 

This Decision: $7,759. 

Charge Effective Date: November 1, 

2002. 

Estimated Charge Expiration Date: 

October 1, 2012. 

Class of Air Carriers Not Required To 

Collect PFC’s: No change from previous 

decision. 

Brief Description of Project Approved 

for Use: Replacement snow plow/ 

spreader truck. 

Decision Date: November 30, 2004. 

FOR FURTHER INFORMATION CONTACT: 

Lorna K. Sandridge, Central Region 

Airports Division, (816) 329–2641. 

Public Agency: Erie Municipal Airport 

Authority, Erie, Pennsylvania. 

Application Number: 05–04–C–00–

ERI. 

Application Type: Impose and use a 

PFC. 

PFC Level: $4.50. 

Total PFC Revenue Approved in This 

Decision: $837,953. 

Earliest Charge Effective Date: July 1, 

2005. 

Estimated Charge Expiration Date: 

August 1, 2006. 

Class of Air Carriers Not Required to 

Collect PFC’s: None. 

Brief Description of Projects Approved 

for Collection and Use: 

Environmental assessment for runway 

6/24 extension. 

Site security phase II. 

Command vehicle. 

Airfield access road. 

Acquire Orchard Park mobile home 

estates. 

Replace high intensity runway 

lighting system. 

9/11 security costs. 

Construct two passenger loading 

bridges. 

Aircraft rescue and firefighting 

vehicle (pumper). 

Acquire runway friction tester 

vehicle. 

Decision Date: May 31, 2005. 

FOR FURTHER INFORMATION CONTACT: Lori 

Ledebohm, Harrisburg Airports District 

Office, (717) 730–2835. 

Public Agency: Metropolitan Airports 

Commission, Minneapolis, Minnesota. 

Application Number: 05–07–U–00–

MSP. 

Application Type: Use PFC revenue. 

PFC Level: $4.50. 

Total PFC Revenue to be Used in This 

Decision: $26,410,939. 

Charge Effective Date: April 1, 2003. 

Class of Air Carriers Not Required to 

Collect PFC’S: No change from previous 

decision. 

Brief Description of Project Approved 

for Use: Fire/rescue replacement 

facility. 

Decision Date: June 22, 2005. 

FOR FURTHER INFORMATION CONTACT: 

Gordon Nelson, Minneapolis Airports 

District Office, (612) 713–4358. 

Public Agency: City of Cody, 

Wyoming. 

Application Number: 05–04–C–00–

COD. 

Application Type: Impose and use a 

PFC. 

PFC Level: $4.50. 

Total PFC Revenue Approved in this 

Decision: $220,000. 

Earliest Charge Effective Date: 

September 1, 2005. 

Estimated Charge Expiration Date: 

November 1, 2006. 

Class of Air Carriers Not Required to 

Collect PFC’S: Non-scheduled, ondemand air carriers filing FAA Form 

1800–31. 

Determination: Approved. Based on 

information contained in the public 

agency’s application, the FAA has 

determined that the proposed class 

accounts for less than 1 percent of the 

total annual enplanements at 

Yellowstone Regional Airport. 

Brief Description of Projects Approved 

for Collection and Use: 

Terminal area study (phase I). 

Environmental assessment for 

midfield terminal. 

PFC consulting services. 

Decision Date: June 22, 2005. 

FOR FURTHER INFORMATION CONTACT: 6 

Chris Schaffer, Denver Airports District 

Office, (303) 342–1258. 

Public Agency: County of Humboldt, 

Arcata, California. 

Application Number: 05–07–C–00–

ACV. 

Application Type: Impose and use a 

PFC. 

PFC Level: $4.50. 

Total PFC Revenue Approved in this 

Decision: $392,265. 

Earliest Charge Effective Date: July 1, 

2005. 

Estimated Charge Expiration Date: 

October 1, 2005. 

Class of Air Carriers Not Required to 

Collect PFC’S: Non-scheduled, ondemand air carriers filing FAA Form 

1800–31. 

Determination: Approved. Based on 

information contained in the public 

agency’s application, the FAA has