03-21447. Barclays Global Fund Advisors, et al.; Notice of Application

August 15, 2003.

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.

Summary of Application:

Applicants request an order to amend a prior order that permits: (a) An open-end management investment company, whose series are 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 additional series based on different fixed-income securities indices.

Applicants:

Barclays Global Fund Advisors (“Adviser”), iShares Trust (“Trust”) and SEI Investments Distribution Co. (“Distributor”).

Filing Dates:

The application was filed on August 15, 2003.

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 September 5, 2003 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, DC 20549-0609. Applicants: Richard F. Morris, Esq., Barclays Global Fund Advisors,

c/o Barclays Global Investors, N.A., 45 Fremont Street, San Francisco, CA 94105; Susan C. Mosher, Esq., iShares Trust, c/o Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116; and William E. Zitelli, Esq., SEI Investments Distribution Co., One Freedom Valley Drive, Oaks, PA 19456.

FOR FURTHER INFORMATION CONTACT:

Laura J. Riegel, Senior Counsel, at [phone], or Michael W. Mundt, Senior Special Counsel, at [phone] (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, 450 5th Street, NW., Washington, DC 20549-0102 (tel. [phone]).

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 adviser registered under the Investment Advisers Act of 1940, will serve 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 seven 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 11 new series based on fixed-income securities indices (each, a “New Fund”) that, 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]

3. Each New Fund will invest in a portfolio of securities generally consisting of the component securities of a specified fixed income securities 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.

4. Except for the TIPS Index and the Aggregate Index, all of the Underlying Indices contain fixed-income securities that are eligible for inclusion in the underlying indices for the existing series of the Trust that are subject to the Prior Order. The TIPS Index represents all of the inflation protected public obligations of the United States Treasury. The Aggregate Bond Index includes United States agency mortgage pass-through securities, in addition to fixed-income securities that are included in certain underlying indices for existing series of the Trust. The New Fund that would track the Aggregate Index (“Aggregate Fund”) intends to use “to-be-announced” (“TBA”) transactions to track the United States agency mortgage pass-through securities in the Aggregate Index.^[4] Applicants state that information about the intraday prices for the fixed income securities held by the New Funds (and TBAs held by the Aggregate Fund) is readily available to the marketplace.

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. Except for the Aggregate Fund and the New Funds that track the GS 5-Year Index (“GS 5-Year Fund”) and the GS 10-Year Index (“GS 10-Year Fund”), each New Fund 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. Each of the GS 5-Year Fund and the GS 10-Year Fund generally will invest 90% of its assets in the component securities of its Underlying Index, though at times each of those New Funds may invest up to 20% of its assets in certain futures, options and swap contracts, cash and cash equivalents, as well as in bonds not included in its Underlying Index in order to manage prospective changes to the indices.^[5] The Aggregate Bond Fund will have at least 90% of its net 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). 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.

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.

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  Barclays Global Fund Advisors, et al., Investment Company Act Release Nos. 25594 (May 29, 2002) (notice) and 25622 (June 25, 2002) (order).

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 Nos. 25595 (May 29, 2002) (notice) and 25623 (June 25, 2002) (order).

3.  The Underlying Indices for the New Funds are Lehman Brothers Short U.S. Treasury Index, Lehman Brothers 3-7 Year U.S. Treasury Index, Lehman Brothers 10-20 Year U.S. Treasury Index, Lehman Brothers U.S. Treasury Inflation Notes Index (“TIPS Index”), Lehman Brothers U.S. Credit Index, Lehman Brothers Intermediate U.S. Credit Index, Lehman Brothers Intermediate U.S. Government/Credit Index, Lehman Brothers U.S. Aggregate Index (“Aggregate Index”), Credit Suisse First Boston Liquid U.S. Agency Index, GS $ InvesTop 5-Year Index (“GS 5-Year Index”) and GS $ InvesTop 10-Year Index (“GS 10-Year Index”).

4.  A TBA transaction essentially is a purchase or sale of a United States agency mortgage pass-through security for future settlement at an agreed upon date. Applicants state that 90% of United States agency mortgage pass-through securities are executed as TBA trades. Applicants state that TBA transactions increase the liquidity and pricing efficiency of transactions in United States agency mortgage pass-through securities since they permit similar United States agency mortgage pass-through securities to be traded interchangeably pursuant to commonly observed settlement and delivery requirements.

5.  The bonds will be bonds that the Adviser believes will help the New Fund track its Underlying Index and which are either: (a) included in the broader index upon which such Underlying Index is based; or (b) new issues entering or about to enter the Underlying Index or the broader index upon which such Underlying Index is based.