EFTA01393187.pdf

6. The followingparagraph is inserted on page 78 of the Booklet, immediately following the caption "Special Risks of Debt Options": The risks described in paragraphs 1 through 9 of this section relate to debt options other than options on index-linked securities. The risks described in paragraphs 10 and 11 relate exclusively to options on index-linked securities. 7. The following new paragraphs are inserted on page 82 of the Booklet immediately before the section in Chapter X titled "Special Risks of Foreign Currency Options": 10. In the event of a shortage of index-linked securities that are deliverable on exercise of a physical delivery option, 0CC may impose special exercise settlement procedures similar to those applicable to stock options, including the fixing of a cash settlement price payable by writers who would otherwise be unable to meet their delivery obligations (see the discussion in Chapter VIII under "Settlement"), and/or prohibit the exercise of puts by holders who would be unable to meet the resulting settlement obligations (see paragraph 5 under "Risks of Option Holders" above). 11. In the event that an issuer of an index-linked security calls the entire issue of the security, outstanding options on that issue will be adjusted to require delivery upon exercise of a fixed amount of cash. After such an adjustment, all options on that security that are not in the money will become worthless, and all that are in the money will have no time value. Holders must be prepared to exercise the option to prevent the option from expiring unexercised, and writers must be prepared to perform their obligations prior to the accelerated exercise cut-off date. There is no assurance that the exercise settlement date for an index-linked security option will coincide with the date on which the cash payment to the holders of the underlying security becomes available from the issuer, and covered writers of an accelerated option therefore may be required to pay the cash amount in respect of the option before they receive cash payment on the underlying security. 166 CONFIDENTIAL - PURSUANT TOEFEESERL)O5068651 P. 6(e) CONFIDENTIAL SDNY_GM_00244835 EFTA01393187