

[Federal Register: June 7, 2006 (Volume 71, Number 109)]
[Notices]               
[Page 33006-33007]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jn06-136]                         

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 27387; 812-13285]

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

June 1, 2006.
AGENCY: Securities and Exchange Commission (``Commission'').

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

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Summary of Application: Applicants request an order to amend a prior 
order that permits: (a) An open-end management investment company that 
includes series based on certain fixed-income securities indices to 
issue shares of limited redeemability; (b) secondary market 
transactions in the shares of the series to occur at negotiated prices; 
and (c) affiliated persons of the series to deposit securities into, 
and receive securities from, the series in connection with the purchase 
and redemption of aggregations of the series' shares (``Prior 
Order'').\1\ Applicants seek to amend the Prior Order in order to offer 
two additional series based on fixed-income securities indices (each 
series, a ``New Fund'').
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    \1\ Barclays Global Fund Advisors, et al., Investment Company 
Act Release No. Release No. (June 25, 2002), as subsequently amended 
by iShares Trust, et al., Investment Company Act Release No. 26006 
(April 15, 2003) and Barclays Global Fund Advisors, et al., 
Investment Company Act Release No. 26175 (September 8, 2003).

Applicants: Barclays Global Fund Advisors (``Adviser''), iShares Trust 
(``Trust'') and SEI Investments Distribution Co. (``Distributor'').
    Filing Dates: The application was filed on April 20, 2006 and 
amended on May 24, 2006.

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 June 22, 2006 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, U.S. Securities and Exchange Commission, 100 F 
Street, NE., Washington, DC 20549-1090. Applicants: Ira Shapiro, 
Barclays Global Fund Advisors, c/o Barclays Global Investors, N.A., 45 
Fremont Street, San Francisco, CA 94105; Peter Kronberg, iShares Trust, 
c/o Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 
02116; and John Munch, SEI Investments Distribution Co., One Freedom 
Valley Drive, Oaks, PA 19456.

FOR FURTHER INFORMATION CONTACT: Laura J. Riegel, Senior Counsel, at 
(202) 551-6873, or Michael W. Mundt, Senior Special Counsel, at (202) 
551-6821 (Division of Investment Management).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
Commission's Public Reference Branch, 100 F Street, NE., Washington, DC 
20549-0102 (tel. 202-551-5850).

Applicants' Representations

    1. The Trust is an open-end management investment company 
registered under the Act and established in the state of Delaware. The 
Trust is organized as a series fund with multiple series. The Adviser, 
an investment

[[Page 33007]]

adviser registered under the Investment Advisers Act of 1940, serves as 
investment adviser to each New Fund. The Distributor, a broker-dealer 
unaffiliated with the Adviser and registered under the Securities 
Exchange Act of 1934, serves as the principal underwriter for the 
Trust.
    2. The Trust is currently permitted to offer several series based 
on fixed-income securities indices in reliance on the Prior Order. 
Applicants seek to amend the Prior Order to permit the Trust to offer 
the two New Funds, each of which, except as described in the 
application, would operate in a manner identical to the existing series 
of the Trust that are subject to the Prior Order.\2\
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    \2\ If the amended order is granted, the New Funds would also be 
able to rely on an exemptive order granting certain relief from 
section 24(d) of the Act to the existing series of the Trust that 
are subject to the Prior Order. See iShares, Inc., et al., 
Investment Company Act Release No. 25623 (June 25, 2002) (order).
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    3. Each New Fund will invest in a portfolio of securities generally 
consisting of the component securities of a specified U.S. bond index 
(each, an ``Underlying Index'').\3\ No entity that creates, compiles, 
sponsors, or maintains an Underlying Index is or will be an affiliated 
person, as defined in section 2(a)(3) of the Act, or an affiliated 
person of an affiliated person, of the Trust, the Adviser, the 
Distributor, or a promoter of a New Fund.
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    \3\ The Underlying Indices for the New Funds are Lehman Brothers 
1-3 Year U.S. Credit Index (``1-3 Year Credit Index'') and Lehman 
Brothers U.S. MBS Fixed Rate Index (``MBS Index'').
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    4. Each Underlying Index contains fixed-income securities that are 
eligible for inclusion in the underlying index for an existing series 
of the Trust that is subject to the Prior Order \4\ The 1-3 Year Credit 
Index represents that portion of the Aggregate Index consisting of U.S. 
investment grade bonds that have a remaining maturity of 1 to 3 years. 
The MBS Index represents that portion of the Aggregate Index consisting 
of U.S. agency mortgage pass-through securities. As with the Aggregate 
Bond Fund, the New Fund that would be based on the MBS Index (``MBS 
Fund'') intends to use ``to-be-announced'' (``TBA'') transactions and, 
in some cases, invest directly in U.S. agency mortgage pass-through 
securities, to track the performance of U.S. agency mortgage pass-
through securities.\5\
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    \4\ The Lehman Brothers U.S. Aggregate Index (``Aggregate 
Index'') is the underlying index of iShares U.S. Aggregate Bond Fund 
(``Aggregate Fund'').
    \5\ ``TBA'' refers to a mechanism for the forward settlement of 
United States agency mortgage-pass through securities that permits 
the United States agency mortgage-pass through securities to be 
traded interchangeably pursuant to commonly observed settlement and 
delivery requirements. Applicants state that the use of TBA 
transactions permits investors to obtain exposure to U.S. agency 
mortgage pass-through securities, while promoting liquidity and 
price transparency.
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    5. The investment objective of each New Fund will be to provide 
investment results that correspond generally to the price and yield 
performance of its relevant Underlying Index. Each New Fund will 
utilize as an investment approach a representative sampling strategy 
where each New Fund will seek to hold a representative sample of the 
component securities of the Underlying Index. The New Fund that would 
track the 1-3 Year Credit Index will invest at least 90% of its assets 
in the component securities of its Underlying Index and may invest the 
remainder of its assets in certain futures, options, and swap 
contracts, cash and cash equivalents, and in bonds not included in its 
Underlying Index which the Adviser believes will help the New Fund 
track its Underlying Index. The MBS Fund will have at least 90% of its 
assets invested in: (a) Component securities of its Underlying Index 
and (b) investments that have economic characteristics that are 
substantially identical to the economic characteristics of the 
component securities of its Underlying Index (i.e., the TBAs, as 
discussed above).\6\ The MBS Fund may invest the remainder of its 
assets in certain futures, options, and swap contracts, cash and cash 
equivalents, and in bonds not included in its Underlying Index which 
the Adviser believes will help the New Fund track its Underlying Index. 
Applicants expect that each New Fund will have a tracking error 
relative to the performance of its respective Underlying Index of no 
more than 5 percent.
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    \6\ As with the process used by the Aggregate Fund, the MBS Fund 
may accept delivery of a specified amount of ``cash-in-lieu'' of 
delivery of the designated U.S. agency mortgage pass-through 
securities or TBAs. This practice could result in cash-only 
creations and redemptions. Applicants do not believe that the 
acceptance of ``cash-in-lieu'' of U.S. agency mortgage pass-through 
securities or TBAs on a regular basis by the MBS Fund presents any 
material or unforeseen operation issues or will otherwise have a 
negative impact on the operation of the MBS Fund or the secondary 
market trading of shares of the MBS Fund.
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    6. Applicants state that all discussions contained in the 
application for the Prior Order are equally applicable to the New 
Funds, except as specifically noted by applicants (as summarized 
above). Applicants agree that the amended order will subject applicants 
to the same conditions as imposed by the Prior Order. Applicants 
believe that the requested relief continues to meet the necessary 
exemptive standards.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-8803 Filed 6-6-06; 8:45 am]

BILLING CODE 8010-01-P
