[Federal Register Volume 69, Number 161 (Friday, August 20, 2004)]
[Notices]
[Pages 51723-51733]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-19067]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50189; File No. SR-Amex-2004-05]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change and Amendment 
Nos. 1, 2, 3, and 4 Thereto by the American Stock Exchange LLC To List 
and Trade Certain Vanguard International Equity Index Funds

August 12, 2004.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby 
given that on January 20, 2004, the American Stock Exchange LLC 
(``Amex'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
The Amex amended the proposed rule change first on March 9, 2004.\3\ 
The Exchange filed a second amendment to the proposal on April 22, 2004 
and requested accelerated approval.\4\ The Exchange filed a third 
amendment to the proposal on May 14, 2004.\5\ The Exchange filed a 
fourth amendment to the proposal on August 5, 2004.\6\ 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Marija Willen, Associate General Counsel, 
Amex, to Nancy Sanow, Assistant Director, Division of Market 
Regulation (``Division''), Commission, dated March 8, 2004 
(``Amendment No. 1''). Amendment No. 1 replaced in its entirety 
Amex's original filing. Amendment No. 1 made various nonsubstantive 
changes to the proposed rule change and clarified the manner in 
which costs associated with the proposed new listings would be paid.
    \4\ See letter from Marija Willen, Associate General Counsel, 
Amex, to Nancy Sanow, Assistant Director, Division, Commission, 
dated April 21, 2004 (``Amendment No. 2''). Amendment No. 2 further 
clarified Amex's proposal, explained the indices underlying the 
proposed fund products, and replaced the earlier amended filing in 
its entirety.
    \5\ See letter from Marija Willen, Associate General Counsel, 
Amex, to Florence Harmon, Division, Commission, dated May 13, 2004 
(``Amendment No. 3''). Amendment No. 3 addressed questions arising 
during the course of Commission staff review.
    \6\ See letter from Marija Willen, Associate General Counsel, 
Amex, to Florence Harmon, Division, Commission, dated August 4, 2004 
(``Amendment No. 4''). Amendment No. 4 provided supplemental 
information regarding the indices on which the proposed listings are 
based, including the index maintenance methodology and 
characteristics. The amendment also addressed the Funds' investment 
objectives, availability of information about Fund Shares, and local 
trading restrictions that will affect the ability of the Funds to do 
``in-kind'' creation and redemption transactions.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade under Amex Rules 1000A et 
seq. the shares of certain index funds that are series of the Vanguard 
International Equity Index Fund. The funds seek to track the following 
regional indices compiled by Morgan Stanley Capital International Inc. 
(MSCI[reg]) \7\ (``MSCI''): MSCI Europe Index, MSCI Pacific 
Index, and MSCI Emerging Markets Select Index.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change
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    \7\ ``MSCI[reg] is a service mark of Morgan Stanley & Co. 
Incorporated.
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    In its filing with the Commission, Amex included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item III below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Amex Rules 1000A et seq. provide standards for the listing of Index 
Fund Shares, which are securities issued by an open-end management 
investment company (open-end mutual fund) for Exchange trading. These 
securities are registered under the Investment Company Act of 1940 \8\ 
(``1940 Act'') as well as the Exchange Act.\9\ Index Fund Shares are 
defined in Amex Rule 1000A as securities based on a portfolio of stocks 
or fixed income securities that seek to provide investment results that 
correspond generally to the price and yield of a specified foreign or 
domestic stock index or fixed income securities index.
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    \8\ 15 U.S.C. 80a et seq.
    \9\ 15 U.S.C. 78a et seq.
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    The Exchange proposes to list and trade under Amex Rules 1000A et 
seq. the following three securities issued by funds (each a ``Vanguard 
Index Fund'' or ``Fund'') that are series of the Vanguard International 
Equity Index Fund (``Trust''): \10\
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    \10\ The Trust has other funds that issue VIPER Shares. The 
Exchange states that those issues of VIPER Shares met the 
requirements of Amex Rule 1000A, Commentary .02, for listing 
pursuant to Rule 19b-4(e) of the Exchange Act.
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     Vanguard European VIPERs, a share class of Vanguard 
European Stock Index Fund, which seeks to track the MSCI Europe Index;
     Vanguard Pacific VIPERs, a share class of Vanguard Pacific 
Stock Index Fund, which seeks to track the MSCI Pacific Index; and
     Vanguard Emerging Market VIPERs, a share class of Vanguard 
Emerging Markets Stock Index Fund, which seeks to track the Select 
Emerging Markets Index.
    For descriptions of the underlying indices for the Funds, see 
``Target Indices--Key Characteristics'' below as well as Exhibits A to 
C to the Exchange's proposed rule change. Index descriptions, component 
selection criteria, index maintenance and issue changes, the top 
components of each index, and portfolio composition and characteristics 
are attached as Exhibits A through C of the Form 19b-4 submitted by the 
Exchange and are available as specified in Item IV below. The index on 
which a particular Fund is based is referred to as a ``Target Index,'' 
and the securities included in such index are referred to as 
``Component Securities.'' The Vanguard Group, Inc. (``Adviser'' or 
``Vanguard'') is the investment adviser to each Fund.\11\ The Adviser 
is registered under

[[Page 51724]]

the Investment Advisers Act of 1940 (``Advisors Act'').\12\ Pursuant to 
Rule 10A-3 of the Exchange Act \13\ and Section 3 of the Sarbanes-Oxley 
Act of 2002,\14\ the Exchange will prohibit the individual or 
conditional listings of any security of an issuer that is not in 
compliance with the requirements set forth therein.\15\
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    \11\ Vanguard requested an exemption from various provisions of 
the 1940 Act and rules thereunder (``Application''). See Investment 
Company Act Release No. 26246 (November 3, 2003), 68 FR 63135 
(November 7, 2003) (File No. 812-12860). The Commission granted the 
requested exemption in an order dated December 1, 2003. See 
Investment Company Act Release No. 26281 (December 1, 2003). The 
relief granted is substantially similar to the relief granted by the 
Commission in December 2000 to Vanguard Index Funds et al. See 
Investment Company Act Release No. 24789 (December 12, 2000), 65 FR 
79439 (December 19, 2000) (approving File No. 812-12094). 
Information in this filing regarding the Funds is based on material 
in the Application and each Fund's registration statement.
    \12\ 15 U.S.C. 80b-1 et seq.
    \13\ 17 C.F.R. 240.10A-3.
    \14\ See Section 3 of Pub. L. No. 107-204, 116 Stat. 745 (2002).
    \15\ Telephone conversation between Marija Willen, Associate 
General Counsel, Amex, and Brian Trackman, Attorney, Division, 
Commission, on May 21, 2004.
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    Amex represents that, while the Adviser will manage each Fund, the 
Trust's Board of Trustees (``Board'') will have overall responsibility 
for the Funds' operations. Amex further represents that the composition 
of the Board is, and will be, in compliance with the requirements of 
Section 10 of the 1940 Act.\16\
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    \16\ 15 U.S.C. 80a-10.
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    Vanguard Marketing Corporation (``Distributor''), a wholly owned 
subsidiary of Vanguard and a broker-dealer registered under the 
Exchange Act, is the principal underwriter and distributor of Creation 
Units (as defined below) of the Funds.\17\
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    \17\ As with other VIPER Shares, the Distributor is affiliated 
with the investment advisor. According to the Application, the 
Distributor facilitates creation and redemption orders for 
Authorized Participants. The Distributor is not involved in the 
selection of any portfolio securities, and appropriate information 
barriers and insider trading policies exist to prevent the misuse of 
non-public information. Telephone conversation between Scott Ebner, 
Counsel, Amex, and Florence Harmon, Senior Special Counsel, 
Division, Commission, on August 12, 2004.
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    Vanguard Index Participation Equity Receipts (``VIPER Shares'') are 
a class of exchange-traded securities that represent an interest in the 
portfolio of stocks held by a particular Vanguard Index Fund. In 
addition to VIPER Shares, the Funds offer classes of shares that are 
not exchange-traded, which are referred to as ``Conventional Shares.'' 
\18\
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    \18\ As described in the Application, the Vanguard Index Funds 
organizational documents permit the Vanguard Index Funds to issue 
shares of different classes. The European Stock Index Fund and the 
Pacific Stock Index Fund also offer three classes of Conventional 
Shares (Investor, Admiral and Institutional classes) and the Pacific 
Stock Index Fund offers two classes of Conventional Shares (Investor 
and Institutional classes).
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    VIPER Shares will be registered in book-entry form only, and the 
Funds will not issue individual share certificates. The Depository 
Trust Company (``DTC'') or its nominee will be the record or registered 
owner of all outstanding VIPER Shares. Beneficial ownership of VIPER 
Shares will be shown on the records of the DTC or DTC participants.
A. Target Indices, Investment Objectives, and Tracking Error
    As noted in the Application, each Fund seeks to track, as closely 
as possible, the performance of its Target Index.\19\ In seeking to 
track its Target Index, each Fund uses the ``replication'' method, in 
which each stock found in the Target Index is held in about the same 
proportion as represented in the index itself. Each Fund will invest at 
least 90% of its assets in the component securities of its respective 
Target Index. To the extent that a Fund invests in instruments other 
than common stocks included in its Target Index, it will invest no more 
than 10% of its assets in those other instruments.\20\ Such instruments 
could include stock and index futures, options on stocks and futures, 
convertible securities, swap agreements, cash investments, forward 
foreign currency investments, foreign currency exchange contracts, 
shares of other investment companies (within the limits permitted by 
Section 12(d)(1) of the 1940 Act, 15 U.S.C. 80a-12(d)(1)), stocks about 
to be added to the Target Index, and any other instrument not 
inconsistent with the Fund's investment policies as described in detail 
in its registration statement, which the Adviser believes will help the 
Fund to track the performance of its Target Index.
    Each Fund will maintain regulated investment company compliance, 
which requires, among other things, that, at the close of each quarter 
of the Fund's taxable year, not more than 25% of its total assets may 
be invested in the securities of any one issuer.\21\
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    \19\ The prospectuses for the Funds disclose that each Fund 
reserves the right to substitute a different index for the Target 
Index that the Fund currently tracks. Substitution could occur if 
the current index is discontinued, the Fund's license with the 
sponsor of the current index is terminated, or for any other reason 
determined in good faith by the Board. In every such instance, the 
substitute index would measure the same general market as the 
current index. Fund shareholders would be notified in the event that 
a Fund's current index is replaced, and investors who hold their 
shares through a broker or other intermediary would receive the 
notification from their intermediary. Should the Fund substitute a 
different index for the current Target Index, the Exchange will file 
a proposed rule change pursuant to Form 19b-4 to address, among 
other things, the listing and trading characteristics of the new 
index and the Exchange's surveillance procedures applicable to the 
new index. See Amendment No. 3.
    \20\ Each of these Funds will invest not more than 10% of fund 
assets in ADRs that are not included in component securities of 
their Target Index. Currently, the Target Indices do not contain 
ADRs. To the extent that these Funds invest more than 10% of their 
assets in ADRs, these ADRs shall be listed on a national securities 
exchange or quoted on the Nasdaq NMS. Telephone conversation between 
Scott Ebner, Associate Director, New Product Development, Amex, and 
Florence Harmon, Senior Special Counsel, Division, Commission, on 
August 12, 2004.
    \21\ In order for a Fund to qualify for tax treatment as a 
regulated investment company, it must meet several requirements 
under the IRC. Among these is the requirement that, at the close of 
each quarter of the Fund's taxable year, (i) at least 50% of the 
market value of the Fund's total assets must be represented by cash 
items, U.S. government securities, securities of other regulated 
investment companies and other securities, with such other 
securities limited for purposes of this calculation in respect of 
any one issuer to an amount not greater than 5% of the value if the 
Fund's assets and not greater than 10% of the outstanding voting 
securities of such issuer, and (ii) not more than 25% of the value 
of its total assets may be invested in the securities of any one 
issuer, or two or more issuers that are controlled by the Fund 
(within the meaning of Section 851 (b)(4)(B) of the Internal Revenue 
Code) and that are engaged in the same or similar trades or 
businesses or related trades or business (other than U.S. government 
securities or the securities of other regulated investment 
companies).
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    According to the Application, each of the Funds historically has 
tracked its Target Index very closely. Measured over virtually any 
period, the gap between the performance of a Fund and its Target Index 
rarely exceeds 1% per annum, and in almost all cases is significantly 
less than that. The Exchange states that it expects that, in the 
future, the Funds will track their Target Indices with a similar degree 
of precision and will have a tracking error of less than 5% per annum.
B. Index Maintenance
    MSCI describes its index maintenance in terms of three broad 
categories of implementation of changes:
     Annual full country index reviews that systematically re-
assess the various dimensions of the equity universe for all countries 
and are conducted on a fixed annual timetable;
     Quarterly index reviews, aimed at promptly reflecting 
other significant market events; and
     Ongoing event-related changes, such as mergers and 
acquisitions, which are generally implemented in the indices rapidly as 
they occur.

Potential changes in the status of countries (stand-alone, emerging, 
developed) follow their own separate timetables. These changes are 
normally implemented in one or more phases at the regular annual full 
country index review and quarterly index review dates.
    MSCI carries out the annual full country index review for all the 
MSCI

[[Page 51725]]

Standard Country Indices once every 12 months and implements any 
changes as of the close of the last business day of May. The 
implementation of changes resulting from a quarterly index review 
occurs on only three dates throughout the year: as of the close of the 
last business day of February, August and November. Any Country Indices 
may be impacted at the quarterly index review. MSCI Index additions and 
deletions due to quarterly index rebalancings are announced at least 
two weeks in advance.
    MSCI makes changes to the methodologies, including changes to the 
Country Indices selected for each of the Target Indices, public via 
print and electronic media, and in particular, makes the press releases 
regarding any changes available on its Web site.
    In constructing its indices, MSCI aims to target a free float-
adjusted market representation of 85% within each industry group, 
within each country. However, because of differences in the structure 
of industries, this industry representation target may not be exactly 
and uniformly achieved in the indices across all industry groups. The 
differences in the structure of industries, and other considerations, 
may lead to over- or under-representation in certain industries. In 
these instances, the indices are constructed with a view to minimizing 
the divergence between the industry group representation achieved in 
the index and the 85% representation guideline. Since the over- and 
under-representation of industries is unlikely to be exactly off-
setting, the average industry group representation achieved in a given 
country is also likely to be different from the 85% level.
    As to defining the industry groups, MSCI uses the Global Industry 
Classification Standard (GICS), under which each company is assigned 
uniquely to one sub-industry according to its principal business 
activity. Therefore, a company can only belong to one industry grouping 
at each of the four levels of the GICS.
    In connection with the possibility of index substitution referenced 
in footnote 5 to Amendment No. 2 to this filing, the Exchange 
represents that if a Fund substitutes a different index for the Target 
Index that it currently tracks, the Exchange will take appropriate 
steps towards listing approval, including filing for a rule change with 
the Commission, as necessary in light of then-existing Exchange listing 
standards.
C. Dissemination of Index Information
    The Funds have been advised by MSCI that the value of each Fund's 
Target Index is now and will be disseminated intra-day at regular 
intervals (every 60 seconds) as individual Component Securities change 
in price. These intra-day values based on the sale reporting in the 
foreign market of the Target Indices will be disseminated real time 
throughout the foreign market trading day by organizations authorized 
by MSCI, including, by subscription, from quote vendors such as 
Bloomberg, Dow Jones Markets, DRI/McGraw Hill, Lipper Analytical, 
Quick, Quotron, Reuters, and Telekurs. In addition, these organizations 
will disseminate values for each Target Index once each trading day, 
based on closing prices in the relevant exchange market.
    The daily closing index value and the percentage change in the 
daily closing index value for the Target Indices are publicly available 
on the MSCI Web site at http://www.msci.com. In addition, various news 
publications (e.g., Barron's, Business Week, Forbes, Global Finance, 
Investor's Daily, The New York Times, and The Wall Street Journal in 
the United States) publish data for certain MSCI indices. For example, 
The Wall Street Journal has been publishing the closing index value for 
MSCI indices covering the United States, the United Kingdom, Canada, 
Japan, France, Germany, Hong Kong, Switzerland, Australia, the World, 
and EAFE (Europe, Australasia, and Far East).
    Data--including weights, index shares, closing prices and corporate 
actions--regarding each Target Index is available to MSCI subscribers 
through various methods of delivery. MSCI index data may be delivered 
to subscribers directly from MSCI on a daily or monthly basis via 
electronic delivery methods. MSCI subscribers also may receive index 
data on a monthly or quarterly basis in print format via express mail. 
Several independent data vendors also package and disseminate MSCI data 
in various value-added formats (including vendors displaying both 
securities and index levels, such as FAME, FactSet, Datastream, and 
RIMES, and vendors displaying index levels only, such as Bloomberg, Dow 
Jones Markets, DRI/McGraw Hill, Lipper Analytical, Quick, Quotron, 
Reuters, and Telekurs). According to the Adviser, compared to the MSCI 
data available free of charge from the MSCI Web site, the data 
available to users subscribing to quote vendors such as Bloomberg and 
Reuters includes more frequent calculation and dissemination of index 
levels, including ``real-time'' feeds for certain indices, while the 
data available to MSCI paid subscribers (either directly from MSCI or 
from an independent ``full data'' vendor) includes more detailed 
information in respect of the securities included in a given index.
D. Target Indices--Key Characteristics
    General: As further described below, the Target Indices are 
constructed to provide broad and fair market representation in a given 
market. MSCI adjusts the market capitalization of index constituents 
for free float and targets for index inclusion 85% of free float 
adjusted market capitalization in each industry group in each country. 
MSCI defines the free float of a security as the proportion of shares 
outstanding that are deemed to be available for purchase in the public 
equity markets by international investors. In practice, limitations on 
free float available to international investors include:
     Strategic and other shareholdings not considered part of 
available free float.
     Limits on share ownership for foreign investors.
    MSCI free-float adjusts the market capitalization of each security 
using an adjustment factor referred to as the Foreign Inclusion Factor 
(FIF). The free float-adjusted market capitalization of a security is 
calculated as the product of the FIF and the security's full market 
capitalization.
    Information about average daily trading volume of the Target 
Indices, as of May 2004, is as follows:
     The five highest weighted stocks in the MSCI Europe 
Index--which represent 14.8% of index weight--had an average daily 
trading volume in excess of 100 million shares during the past two 
months. 97.9% of the components stocks traded at least 250,000 shares 
in each of the previous six months.
     The five highest weighted stocks in the MSCI Pacific 
Index--which represent 11.15% of index weight--had an average daily 
trading volume in excess of 4 million shares during the past two 
months. 95.9% of the components stocks traded at least 250,000 shares 
in each of the previous six months.
     The five highest weighted stocks in the Select Emerging 
Markets Index--which represent 16.45% of index weight--had an average 
daily trading volume in excess of 4.5 million shares during the past 
two months. 96.9% of the components stocks traded at least 250,000 
shares in each of the previous six months.

[[Page 51726]]

    MSCI Europe Index: The MSCI Europe Index is a free float-adjusted 
market capitalization weighted index that is designed to measure 
developed market equity performance in Europe. It comprises 16 of the 
50 countries for which MSCI has indices. Each MSCI country index is 
created separately and then aggregated, without change, into the larger 
regional index. Currently, the MSCI Europe Index includes Austria, 
Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the 
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the 
United Kingdom. As of December 2003, the Index contained 539 components 
with a total market capitalization of $5,236,148,846,065. The average 
market capitalization was $9,714,561,867. The ten largest constituents 
represent approximately 24.05% of the index weight. The five highest 
weighted stocks in the MSCI Europe Index--which represent 14.8% of 
index weight--had an average daily trading volume in excess of 100 
million shares during the past two months. Additional detail on the 
MSCI Europe Index can be found in Exhibit A to the Amex filing, which 
is available at the principal office of the Amex and at the Commission.
    MSCI Pacific Index: The MSCI Pacific Index is a free float-adjusted 
market capitalization weighted index that is designed to measure equity 
market performance in the Pacific region. It comprises five of the 50 
countries for which MSCI has indices. Each MSCI country index is 
created separately and then aggregated, without change, into the larger 
regional index. Currently, the MSCI Pacific Index includes Australia, 
Hong Kong, Japan, New Zealand, and Singapore. As of December 31, 2003, 
the Index contained 466 components with a total market capitalization 
of $2,145,036,798,509. The average market capitalization was 
$4,603,083,259. The ten largest constituents represent approximately 
18.59% of the index weight. The five highest weighted stocks in the 
MSCI Pacific Index--which represent 11.15% of index weight--had an 
average daily trading volume in excess of 4 million shares during the 
past two months. Additional detail on the MSCI Pacific Index can be 
found in Exhibit B to the Amex filing, which is available at the 
principal office of the Amex and at the Commission.
    Select Emerging Markets Index: The Select Emerging Markets Index is 
a free float-adjusted market capitalization weighted index and 
represents the securities included in the following standard MSCI 
Country Indices: Argentina, Brazil, Chile, China, Czech Republic, 
Hungary, India, Indonesia, Israel, Korea, Mexico, Peru, Philippines, 
Poland, South Africa, Taiwan, Thailand and Turkey. The weight of each 
country in the index is reviewed on a monthly basis. After the 
calculation of the last business day of the month, MSCI reviews the 
weight of each country in the index. If the weight of a country is 
above 20%, the initial weight of this country for the calculation of 
the first business day of the month is set to 20% and the excess amount 
is distributed among the other constituents based on their respective 
weights. The weight of the countries in the index will then fluctuate 
according to market movements until the end of the month when the 
monthly monitoring is performed once again. As of December 31, 2003, 
the Index contained 533 components with a total market capitalization 
of $740,350,335,632. The average market capitalization was 
$1,389,025,020. The ten largest constituents represent approximately 
23.76% of the index weight. The five highest weighted stocks in the 
Select Emerging Markets Index--which represent 16.45% of index weight--
had an average daily trading volume in excess of 4.5 million shares 
during the past two months. Additional detail on the Select Emerging 
Markets Index can be found in Exhibit C to the Amex filing, which is 
available at the principal office of the Amex and at the Commission.
E. Availability of Information About VIPER Shares
    The Exchange states that Vanguard's Web site, http://www.Vanguard.com, is and will be publicly accessible at no charge, and 
will contain the following information for each Fund's VIPER Shares: 
(a) The prior business day's closing net asset value (``NAV''), the 
mid-point of the bid-asked spread at the time that the Fund's NAV is 
calculated (``Bid-Asked Price''),\22\ and a calculation of the premium 
or discount of the Bid-Asked Price in relation to the closing NAV; (b) 
data for a period covering at least the four previous calendar quarters 
(or the life of a Fund, if shorter) indicating how frequently each 
Fund's VIPER Shares traded at a premium or discount to NAV based on the 
Bid-Asked Price and closing NAV, and the magnitude of such premiums and 
discounts; (c) the Fund's Prospectus and two most recent reports to 
shareholders; and (d) other quantitative information such as daily 
trading volume and a comparison of the performance of each share class 
of each Fund to the performance of the relevant Target Index, e.g., the 
tracking error. In addition, the product description for each Fund 
(``Product Description'') will state that the Adviser's Web site at 
http://www.Vanguard.com has information about the premiums and 
discounts at which the Fund's VIPER Shares have traded.\23\
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    \22\ Because the NAV for all share classes of all Vanguard funds 
is calculated as of the close of the New York Stock Exchange 
(``NYSE'') (usually 4 p.m.), but the market for VIPER Shares and 
other exchange traded funds does not close until 4:15 p.m., the 
closing market price is not measured at the same time as NAV. This 
difference in timing could lead to discrepancies between performance 
based on NAV and performance based on market price that give 
investors an inaccurate picture of the correlation between the two 
figures. To remedy this problem, the Funds compare performance of a 
Fund's VIPER Shares based on NAV to performance of the VIPER Shares 
based on the mid-point of the bid-asked spread at the time NAV is 
calculated. By calculating market-based and NAV-based performance at 
the same time, the Exchange states, according to the Application, 
two performance figures will be comparable, and any differences will 
be attributable to market forces rather than timing differences.
    \23\ See ``Prospectus Delivery'' below regarding the Product 
Description. The Exemptive Order granted relief from Section 24(d) 
of the 1940 Act, which relief permits dealers to sell VIPER Shares 
in the secondary market unaccompanied by a statutory prospectus when 
prospectus delivery is not required by the Securities Act of 1933.
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    Amex will disseminate for each Fund on a daily basis by means of 
Consolidated Tape Association (``CTA'') and CQ High Speed Lines 
information with respect to the Intraday Indicative Value (as defined 
and discussed below under ``Dissemination of Intraday Indicative 
Value''), recent NAV, shares outstanding, and estimated cash amount and 
total cash amount per Creation Unit. The Exchange will make available 
on its Web site daily trading volume, closing price, the NAV, and final 
dividend amounts to be paid for each Fund. The closing prices of the 
Deposit Securities (as defined below) are readily available from, as 
applicable, the relevant exchanges, automated quotation systems, 
published or other public sources in the relevant country, or on-line 
information services such as Bloomberg or Reuters. The exchange rate 
information required to convert such information into U.S. dollars is 
also readily available in newspapers and other publications and from a 
variety of on-line services.
    The Exchange states that beneficial owners of VIPER Shares 
(``Beneficial Owners'') will receive all of the statements, notices, 
and reports required under the 1940 Act and other applicable laws. They 
will receive, for example, annual and semi-annual fund reports, written 
statements accompanying dividend payments, proxy statements, annual 
notifications detailing the tax status of fund distributions, and Form

[[Page 51727]]

1099-DIVs. Some of these documents will be provided to Beneficial 
Owners by their brokers, while others will be provided by the Fund 
through the brokers.
F. Creation and Redemption of VIPER Shares
    Each Fund will issue and redeem VIPER Shares only in aggregations 
of a specified number (``Creation Units'').\24\ Purchasers of Creation 
Units will be able to separate a Creation Unit into individual VIPER 
Shares. The actual number of VIPER Shares in a Creation Unit may differ 
from Fund to Fund, but will be no less than 50,000. Once the number of 
VIPER Shares in a Creation Unit is determined, it will not change 
thereafter (except in the event of a stock split or similar 
revaluation). The initial value of a VIPER Share will range from $50 to 
$100 per share, depending on the Fund.
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    \24\ The Funds will offer all current and future holders of 
Conventional Shares, except those holding Conventional Shares 
through a 401(k) or other participant-directed employer-sponsored 
retirement plan, the opportunity to convert such shares into VIPER 
Shares of equivalent value (``Conversion Privilege''). Many 
shareholders have taken advantage of the Conversion Privilege in 
those funds that currently offer VIPER Shares. The Conversion 
Privilege will be a ``one-way'' transaction only. Holders of 
Conventional Shares may convert those shares into VIPER Shares, but 
Beneficial Owners of VIPER Shares will not be permitted to convert 
those shares into Conventional Shares.
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    Creation: Persons purchasing Creation Units from a Fund must make 
an in-kind deposit of a basket of securities (``Deposit Securities'') 
consisting of stocks selected by the Adviser from among the stocks 
contained in the issuing fund's portfolio, together with an amount of 
cash specified by the Adviser (``Balancing Amount''), plus the 
applicable transaction fee (``Transaction Fee''). The Deposit 
Securities and the Balancing Amount collectively are referred to as the 
``Creation Deposit.'' The Balancing Amount is a cash payment designed 
to ensure that the value of a Creation Deposit is identical to the 
value of the Creation Unit it is used to purchase. The Balancing Amount 
is an amount equal to the difference between the NAV of a Creation Unit 
and the market value of the Deposit Securities.\25\ The Transaction Fee 
is a fee imposed by the Funds on investors purchasing (or redeeming--
see ``Redemption,'' below) Creation Units. The purpose of the 
Transaction Fee is to protect the existing shareholders of the Funds 
from the dilutive effect of the transaction costs (primarily custodial 
costs) that the Funds incur when investors purchase (or redeem) 
Creation Units.\26\
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    \25\ If the market value of the Deposit Securities is greater 
than the NAV of a Creation Unit, then the Balancing Amount will be a 
negative number, in which case the Balancing Amount will be paid by 
the Fund to the purchaser, rather than vice versa.
    \26\ If a Fund permits a purchaser to deposit cash in lieu of 
depositing one or more Deposit Securities, the purchaser will be 
assessed an appropriate Transaction Fee to offset the transaction 
cost to the Fund of buying those particular Deposit Securities. As 
noted in Amendment No. 2 to this filing, the Funds will impose a 
Transaction Fee on investors purchasing or redeeming Creation Units, 
the purpose of which is to protect the existing shareholders of the 
Funds from the dilutive effect of the transaction costs (primarily 
custodial costs) that the Funds incur when investors purchase or 
redeem Creation Units. In particular, if a Fund permits a purchaser 
to deposit cash in lieu of depositing one or more Deposit 
Securities, the purchaser will be assessed an appropriate 
Transaction Fee to offset the transaction cost to the Fund of buying 
those particular Deposit Securities. Local restrictions on transfers 
of securities to and between certain types of investors exist in 
certain countries (currently Greece, Taiwan, Korea, India and 
Brazil), which may restrict ``in kind'' creations and redemptions of 
Creation Units and therefore require that creation (or redemption) 
take place partly in cash and partly ``in kind.'' The Exchange will 
disclose this information in the Information Circular sent to 
members and member organizations about the Funds. It is expected 
that continuous sales and redemptions of the Funds that hold shares 
of companies in the relevant countries will result in their trading 
close to net asset values.
---------------------------------------------------------------------------

    The Adviser will make available through the DTC or the Distributor 
on each business day, prior to the opening of trading on the Exchange, 
a list of names and the required number of shares of each Deposit 
Security to be included in the Creation Deposit for each Fund.\27\ The 
Adviser also will make available on a daily basis information about the 
previous day's Balancing Amount.
---------------------------------------------------------------------------

    \27\ The Exchange states that, in accordance with Vanguard's 
Code of Ethics and Inside Information Policy, personnel of the 
Adviser with knowledge about the composition of a Creation Deposit 
will be prohibited from disclosing such information to any other 
person, except as authorized in the course of their employment, 
until such information is made public.
---------------------------------------------------------------------------

    The Funds reserve the right to permit or require a purchasing 
investor to substitute an amount of cash or a different security to 
replace any prescribed Deposit Security.\28\ Substitution might be 
permitted or required, for example, because one or more Deposit 
Securities may be unavailable, may not be available in the quantity 
needed to make a Creation Deposit, or may not be eligible for trading 
by an Authorized Participant \29\ (or the investor on whose behalf the 
Authorized Participant is acting) due to local trading restrictions or 
other circumstances.\30\ Brokerage commissions incurred by a Fund to 
acquire any Deposit Security not part of a Creation Deposit are 
expected to be immaterial, and in any event the Adviser represents that 
it will adjust the relevant Transaction Fee to ensure that the Fund 
collects the extra expense from the purchaser.
---------------------------------------------------------------------------

    \28\ According to the Application, in certain instances, a Fund 
may require a purchasing investor to purchase a Creation Unit 
entirely for cash. For example, on days when a substantial 
rebalancing of a Fund's portfolio is required, the Adviser might 
prefer to receive cash rather than in-kind stocks so that it has 
liquid resources on hand to make the necessary purchases. The 
registration statement, however, states that the Funds have no 
current intention of issuing Creation Units for cash and would only 
do so in unusual circumstances.
    \29\ Orders to create or redeem VIPER Shares must be placed 
through an Authorized Participant, which is either (1) A broker-
dealer or other participant in the continuous net settlement system 
of the National Securities Clearing Corporation or (2) a DTC 
participant.
    \30\ See supra note 26.
---------------------------------------------------------------------------

    As noted above, on each business day, each Fund will make available 
a list of names and amount of each security constituting the current 
Deposit Securities and the Balancing Amount effective as of the 
previous business day. As noted below in ``Dissemination of Intraday 
Indicative Value,'' the Exchange will disseminate through the 
facilities of the CTA, at regular intervals (currently anticipated to 
be 15-second intervals) during the Exchange's regular trading hours, 
the Intraday Indicative Value on a per-VIPER-Share basis. The Funds 
will not be involved in, or responsible for, the calculation or 
dissemination of any such amount and will make no warranty as to its 
accuracy.\31\
---------------------------------------------------------------------------

    \31\ The Commission, however, would have concerns if the IIV was 
not an accurate reflection of the Fund's value and would expect the 
Exchange to evaluate the continued listing of such a product.
---------------------------------------------------------------------------

    Redemption: VIPER Shares in Creation-Unit-size aggregations will be 
redeemable on any day on which the New York Stock Exchange is open in 
exchange for a basket of securities (``Redemption Securities''). As it 
does for Deposit Securities, the Adviser will make available to 
Authorized Participants on each business day prior to the opening of 
trading a list of the names and number of shares of Redemption 
Securities for each Fund. The Redemption Securities given to redeeming 
investors in most cases will be the same as the Deposit Securities 
required of investors purchasing Creation Units on the same day.\32\

[[Page 51728]]

Depending on whether the NAV of a Creation Unit is higher or lower than 
the market value of the Redemption Securities, the redeemer of a 
Creation Unit will either receive from or pay to the Fund a cash amount 
equal to the difference.\33\ The redeeming investor also must pay to 
the Fund the applicable Transaction Fee to cover transaction costs.\34\
---------------------------------------------------------------------------

    \32\ There may be circumstances, however, where the Deposit and 
Redemption Securities could differ. For example, if ABC stock were 
replacing XYZ stock in a Fund's Target Index at the close of today's 
trading session, today's prescribed Deposit Securities might include 
ABC but not XYZ, while today's prescribed Redemption Securities 
might include XYZ but not ABC. According to the Application, having 
the flexibility to prescribe different baskets for creation and 
redemption promotes efficient portfolio management and lowers the 
Fund's brokerage costs, and thus is in the best interests of the 
Fund's shareholders.
    \33\ In the typical situation where the Redemption Securities 
are the same as the Deposit Securities, this cash amount will be 
equal to the Balancing Amount described above in the creation 
process.
    \34\ Redemptions in which cash is substituted for one or more 
Redemption Securities will be assessed an appropriate Transaction 
Fee to offset the transaction cost to the fund of selling those 
particular Redemption Securities. See supra text accompanying note 
26.
---------------------------------------------------------------------------

    A Fund has the right to make redemption payments in cash, in kind, 
or a combination of each, provided that the value of its redemption 
payments equals the NAV of the VIPER Shares tendered for 
redemption.\35\ The Adviser currently contemplates that Creation Units 
of each Fund will be redeemed principally in kind, except in certain 
circumstances. A Fund may make redemptions partly or wholly in cash in 
lieu of transferring one or more Redemption Securities to a redeeming 
investor if the Fund determines, in its discretion, that such 
alternative is warranted due to unusual circumstances. This could 
happen if the redeeming investor is unable, by law or policy, to own a 
particular Redemption Security. For example, a foreign country's 
regulations may restrict or prohibit a redeeming investor from holding 
shares of a particular issuer located in that country.\36\ The Adviser 
represents that it will adjust the Transaction Fee imposed on a 
redemption wholly or partly in cash to take into account any additional 
brokerage or other transaction costs incurred by the Fund.
---------------------------------------------------------------------------

    \35\ In the event an Authorized Participant has submitted a 
redemption request in good order and is unable to transfer all or 
part of a Creation-Unit-size aggregation for redemption, a Fund may 
nonetheless accept the redemption request in reliance on the 
Authorized Participant's undertaking to deliver the missing VIPER 
Shares as soon as possible, which undertaking shall be secured by 
the Authorized Participant's delivery and maintenance of collateral. 
The Authorized Participant Agreement will permit the Fund to buy the 
missing VIPER Shares at any time and will subject the Authorized 
Participant to liability for any shortfall between the cost to the 
Fund of purchasing the VIPER Shares and the value of the collateral.
    \36\ See supra note 26.
---------------------------------------------------------------------------

    In order to facilitate delivery of Redemption Securities, each 
redeeming Beneficial Owner or DTC participant acting on behalf of such 
Beneficial Owner must have arrangements with a broker-dealer, bank, or 
other custody provider in each jurisdiction in which any of the 
Redemption Securities are customarily traded. If neither the redeeming 
Beneficial Owner nor the Authorized Participant has such arrangements, 
and it is not otherwise possible to make other arrangements, the Fund 
may in its discretion redeem the VIPER Shares for cash.

G. Dividends

    Dividends from net investment income will be declared and paid at 
least annually by each Fund in the same manner as other open-end 
investment companies. Distributions will generally occur in December.
    The final dividend amount for each Fund, which is made available on 
http://www.amextrader.com, is the amount of dividends to be paid by a 
Fund for the appropriate period (usually annually). The final dividend 
amount is also disseminated by the Funds to Bloomberg and other 
sources.
    The Funds intend to make available to Beneficial Owners of VIPER 
Shares the DTC book-entry dividend reinvestment service. Without this 
service, Beneficial Owners would have to take their distributions in 
cash. Information about the dividend reinvestment service will appear 
in each Fund's prospectus and in its Product Description.\37\
---------------------------------------------------------------------------

    \37\ See supra note 23, and infra ``Prospectus Delivery.''
---------------------------------------------------------------------------

    The cash proceeds of dividends and capital gain distributions 
payable to all Beneficial Owners participating in DTC's reinvestment 
service will be used to purchase additional VIPER Shares for such 
Beneficial Owners. These additional shares will be purchased on the 
secondary market. Some DTC participants may elect not to utilize the 
dividend reinvestment service. Beneficial Owners who hold VIPER Shares 
through these DTC participants may not be able to reinvest their 
dividends and distributions. These Beneficial Owners will receive their 
dividends and distributions in cash. The prospectus for VIPER Shares 
and the Product Description will disclose this fact.

H. Criteria for Initial and Continued Listing

    Shares are subject to the criteria for initial and continued 
listing of Index Fund Shares in Amex Rule 1002A. A minimum of 100,000 
VIPER Shares will be required to be outstanding for each Fund at the 
start of trading. This minimum number of Shares required to be 
outstanding at the start of trading will be comparable to requirements 
that have been applied to previously listed series of Portfolio 
Depositary Receipts and Index Fund Shares. The initial price of a VIPER 
Share for each Fund will be approximately $50 to $100 per share.
    The Exchange believes that the proposed minimum number of VIPER 
Shares outstanding at the start of trading is sufficient to provide 
market liquidity.
I. Original and Annual Listing Fees
    The fee applicable to the original listing of the Index Fund Shares 
on the Exchange is $5,000 for each Fund. In addition, the annual 
listing fee applicable to the VIPER Funds under Section 141 of Amex 
Company Guide (``Company Guide'') will be based upon the year-end 
aggregate number of outstanding VIPER Shares in all Vanguard funds 
listed on the Exchange.
J. Stop and Stop Limit Orders
    Amex Rule 154, Commentary .04(c) provides that stop and stop limit 
orders to buy or sell a security (other than an option, which is 
covered by Amex Rule 950(f) and Commentary thereto) the price of which 
is derivatively based upon another security or index of securities, may 
with the prior approval of a Floor Official, be elected by a quotation, 
as set forth in Commentary .04(c)(i-v). The Exchange has designated 
Index Fund Shares, including VIPER Shares, as eligible for this 
treatment.\38\
---------------------------------------------------------------------------

    \38\ See Securities Exchange Act Release No. 29063, (April 10, 
1991), 56 FR 15652 (April 17, 1991) (File No. SR-Amex-90-31) note 9 
(designating equity derivative securities as eligible for such 
treatment under Amex Rule 154, Commentary .04(c)).
---------------------------------------------------------------------------

K. Amex Rule 190
    Amex Rule 190, Commentary .04 applies to Index Fund Shares listed 
on the Exchange, including VIPER Shares. Commentary .04 states that 
nothing in Amex Rule 190(a) should be construed to restrict a 
specialist registered in a security issued by an investment company 
from purchasing and redeeming the listed security, or securities that 
can be subdivided or converted into the listed security, from the 
issuer as appropriate to facilitate the maintenance of a fair and 
orderly market. However, a specialist's creation unit transaction may 
only be effected on the same terms and conditions as any other 
investor, and only at the NAV of the ETF shares.
L. Prospectus Delivery
    The Exchange, in an Information Circular to Exchange members and 
member organizations, will inform members and member organizations,

[[Page 51729]]

prior to commencement of trading, of the prospectus and Product 
Description delivery requirements that apply to the Funds. The 
Application requested, and the Exemptive Order granted, relief from 
Section 24(d) of the 1940 Act,\39\ which relief permits dealers to sell 
VIPER Shares in the secondary market unaccompanied by a statutory 
prospectus when prospectus delivery is not required by the Securities 
Act of 1933.\40\ Amex represents that any Product Description used in 
reliance on a Section 24(d) of the 1940 Act exemptive order will comply 
with all representations made therein and all conditions thereto.
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 80a-24(d).
    \40\ See supra note 11.
---------------------------------------------------------------------------

M. Trading Halts
    In addition to other factors that may be relevant, the Exchange may 
consider factors such as those set forth in Amex Rule 918C(b) in 
exercising its discretion to halt or suspend trading in Index Fund 
Shares, including VIPER Shares. These factors would include, but are 
not limited to: (1) The extent to which trading is not occurring in 
stocks underlying the index; or (2) whether other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present.\41\ In addition, trading in VIPER Shares will be 
halted if the circuit breaker parameters under Amex Rule 117 have been 
reached.
---------------------------------------------------------------------------

    \41\ See Amex Rule 918C.
---------------------------------------------------------------------------

N. Suitability
    Prior to commencement of trading, the Exchange will issue an 
Information Circular informing members and member organizations of the 
characteristics of the Funds' VIPER Shares and of applicable Exchange 
rules, as well as of the requirements of Amex Rule 411 (Duty to Know 
and Approve Customers).
O. Information Circular
    In connection with the trading of the Funds, the Exchange will 
inform Exchange members and member organizations in an Information 
Circular of certain characteristics of certain Funds, as discussed 
below. The Circular will discuss the special characteristics and risks 
of trading this type of security. Specifically, the Circular, among 
other things, will discuss what the Funds are, how they are created and 
redeemed, the requirement that members and member firms deliver a 
prospectus or Product Description to investors purchasing shares of the 
Fund prior to or concurrently with the confirmation of a transaction, 
applicable Exchange rules, dissemination information, trading 
information and the applicability of suitability rules (including Amex 
Rule 411).\42\ A Circular will also discuss exemptive, no-action and 
interpretive relief, if granted, by the Commission from Section 
11(d)(1) and certain rules under the Act, including Rule 10a-1, Rule 
10b-10, Rule 14e-5, Rule 10b-17, Rule 11d1-2, Rules 15c1-5 and 15c1-6, 
and Rules 101 and 102 of Regulation M under the Act.
---------------------------------------------------------------------------

    \42\ The Commission has issued an order granting the Funds 
relief from Section 24(d) of the 1940 Act, 15 U.S.C. 80a-24(d). See 
Investment Company Act Release No. 26281 (December 1, 2003). Any 
Product Description used in reliance on the Section 24(d) exemptive 
order will comply with all representations made and all conditions 
contained in the application for the order. See supra note 11.
---------------------------------------------------------------------------

    If a Fund permits a purchaser to deposit cash in lieu of depositing 
one or more Deposit Securities, the purchaser will be assessed an 
appropriate Transaction Fee to offset the transaction cost to the Fund 
of buying those particular Deposit Securities. As noted in Amendment 
No. 2 to this filing, the Funds will impose a Transaction Fee on 
investors purchasing or redeeming Creation Units, the purpose of which 
is to protect the existing shareholders of the Funds from the dilutive 
effect of the transaction costs (primarily custodial costs) that the 
Funds incur when investors purchase or redeem Creation Units. In 
particular, if a Fund permits a purchaser to deposit cash in lieu of 
depositing one or more Deposit Securities, the purchaser will be 
assessed an appropriate Transaction Fee to offset the transaction cost 
to the Fund of buying those particular Deposit Securities.
    Local restrictions on transfers of securities to and between 
certain types of investors exist in certain countries (currently 
Greece, Taiwan, Korea, India and Brazil), which may restrict ``in 
kind'' creations and redemptions of Creation Units and therefore 
require that creation (or redemption) take place partly in cash and 
partly ``in kind.'' In such cases, a Fund will charge creation and 
redemption fees intended to offset the transfer and other transaction 
costs incurred by the Fund, including market impact expenses (primarily 
associated with creation units for cash), related to investing in or 
disposing of the basket of securities held by the Fund.\43\ For Funds 
that effect creations and/or redemptions in part or in whole for cash, 
it is possible that portfolio securities transactions in the relevant 
local markets for those Funds could affect the prices of those 
portfolio securities at the times those Funds' NAVs are calculated. The 
Exchange will disclose this information in the Information Circular 
sent to members and member organizations about the Funds.
---------------------------------------------------------------------------

    \43\ See supra note 26.
---------------------------------------------------------------------------

    The Information Circular will likewise disclose that the NAV for 
VIPER Funds will be calculated once daily as of 4 p.m. (Eastern Time) 
each day that the American Stock Exchange is open for trading.
P. Purchases and Redemptions in Creation Unit Size
    In the Information Circular referenced above, members and member 
organizations will be informed that procedures for purchases and 
redemptions of VIPER Shares in Creation Unit size are described in the 
Fund Prospectus and Statement of Additional Information, and that VIPER 
Shares are not individually redeemable but are redeemable only in 
Creation-Unit-size aggregations or multiples thereof.
Q. Surveillance
    The Exchange represents that its surveillance procedures are 
adequate to properly monitor the trading of the VIPER Shares. 
Specifically, the Amex will rely on its existing surveillance 
procedures governing Index Fund Shares, which have been deemed adequate 
under the Exchange Act. In addition, the Exchange, Vanguard, and MSCI 
also have a general policy prohibiting the distribution of material, 
non-public information by their employees. Because MSCI is a broker-
dealer that maintains the Indices, it is imperative that there exists a 
functional separation, such as a firewall, between the trading desk of 
the broker-dealer and the research persons responsible for maintaining 
the Indices. MSCI has represented that such a firewall exists.
R. Hours of Trading/ Minimum Price Variation
    The Funds will trade on the Exchange until 4:15 p.m. (New York 
time) each business day. Shares of each Fund will trade with a minimum 
price variation of $0.01.
S. Dissemination of Intraday Indicative Value
    To provide updated information relating to each Fund for use by 
investors, professionals, and persons wishing to create or redeem VIPER 
Shares based on indices with non-U.S. components, as noted above, the 
Exchange will disseminate through the facilities of the CTA: (1) 
Continuously throughout the trading day the market

[[Page 51730]]

value of a VIPER Share; \44\ and (2) every 15 seconds throughout the 
trading day a calculation of the estimated NAV (also known as the 
Intraday Indicative Value or ``IIV'') \45\ of a VIPER Share as 
calculated by a third-party calculator (``IIV Calculator''). Comparing 
these two figures helps an investor to determine whether, and to what 
extent, VIPER Shares may be selling at a premium or a discount to NAV.
---------------------------------------------------------------------------

    \44\ The consolidated tape will show the market price of VIPER 
Shares only; it will not show the price (i.e., the NAV) of 
Conventional Shares.
    \45\ The Application refers to the IIV as the ``estimated NAV.'' 
The IIV is also referred to by other issuers as an ``Underlying 
Trading Value,'' ``Indicative Optimized Portfolio Value (IOPV),'' 
and ``Intraday Value'' in various places such as the Prospectus and 
marketing materials for different exchange-traded funds.
---------------------------------------------------------------------------

    The IIV Calculator will calculate the IIV of a VIPER Share as 
follows. First, it will establish the market value of a Creation 
Deposit based on the previous night's closing price of each Deposit 
Security plus the previous night's Balancing Amount. Then, throughout 
the day at 15-second intervals, it will recalculate the market value of 
a Creation Deposit based on the then-current market price of each 
Deposit Security plus the previous night's Balancing Amount. As the 
respective international local markets close, the market valuation of 
the Creation Deposit will continue to be updated for foreign exchange 
rates for the remainder of the U.S. trading day at the prescribed 15-
second interval. The valuations of the Creation Deposit throughout the 
day will be compared against the previous night's value to determine 
the percentage change in the value of the Creation Deposit. This 
percentage will then be applied against the previous night's closing 
NAV to estimate the current NAV of a VIPER Share.
    The IIV may not reflect the value of all securities included in the 
applicable index. In addition, the IIV does not necessarily reflect the 
precise composition of the current portfolio of securities held by each 
Fund at a particular point in time. Therefore, the IIV on a per-VIPER-
Share basis disseminated during Amex trading hours should not be viewed 
as a real-time update of the NAV of a particular Fund, which is 
calculated only once a day. While the IIV that will be disseminated by 
Amex at the start of the trading day is expected to be generally close 
to the most recently calculated Fund NAV on a per-VIPER-Share basis, it 
is possible that the value of the portfolio of securities held by a 
Fund may diverge from the value of the Deposit Securities during any 
trading day. In such case, the IIV will not precisely reflect the value 
of the Fund portfolio.
    Amex states, however, that during the trading day, while the 
relevant foreign markets are open for trading, the IIV of a Fund's 
VIPER Shares can be expected to closely approximate the value per VIPER 
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 Adviser). The Exchange 
further states that the circumstances that might cause the IIV of a 
Fund's VIPER Shares to be based on calculations different from the 
valuation per VIPER Share of the actual portfolio of a Fund would not 
be different than circumstances causing any index fund or trust to 
diverge from an underlying benchmark index.
    The Exchange believes that dissemination of the IIV based on the 
Deposit Securities provides additional information regarding each Fund 
that would not otherwise be available to the public and is useful to 
professionals and investors in connection with VIPER Shares trading on 
the Exchange or the creation or redemption of VIPER Shares.
    MSCI Pacific Index:
    For the MSCI Pacific Index, there is no overlap in trading hours 
between the foreign markets and Amex. Therefore, for these VIPER 
Shares, the IIV Calculator will utilize closing prices (in the 
applicable foreign currency) in the principal foreign market for 
securities in the Fund's portfolio and convert the price to U.S. 
dollars. Those values will be updated every 15 seconds during Amex 
trading hours to reflect changes in currency exchange rates between the 
U.S. dollar and the applicable foreign currency. The IIV will also 
include the applicable estimated cash component for the Fund.
    MSCI Europe Index and Select Emerging Markets Index:
    For the MSCI Europe Index and the Select Emerging Markets Index, 
both of which include companies trading in markets with trading hours 
overlapping regular Amex trading hours, the IIV Calculator will update 
the applicable IIV every 15 seconds to reflect price changes in the 
principal foreign market and convert such price into U.S. dollars based 
on the current currency exchange rate. When the foreign market is 
closed but Amex is open, the IIV will be updated every 15 seconds to 
reflect changes in currency exchange rates after the foreign market 
closes. The IIV will also include the applicable estimated cash 
component for each Fund.
2. Statutory Basis
    Amex believes that the proposed rule change is consistent with 
Section 6(b) of the Act \46\ in general, and furthers the objectives of 
Section 6(b)(5) \47\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices; to promote just and 
equitable principles of trade; to foster cooperation and coordination 
with persons engaged regulating, clearing settling, processing 
information with respect to, and facilitating transactions in 
securities; and, in general, to protect investors and the public 
interest.
---------------------------------------------------------------------------

    \46\ 15 U.S.C. 78f(b).
    \47\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were solicited or received with respect to 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 [email protected]. Please include 
File Number SR-Amex-2004-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-Amex-2004-05. 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

[[Page 51731]]

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, 450 Fifth Street, NW., 
Washington, DC 20549. Copies of such filing also will be available for 
inspection and copying at the principal office of the Amex. 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-Amex-2004-05 and should be 
submitted on or before September 10, 2004.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Exchange Act and 
the rules and regulations thereunder, applicable to a national 
securities exchange.\48\ In particular, the Commission finds that the 
proposed rule change is consistent with Section 6(b)(5) of the Act \49\ 
and will promote just and equitable principles of trade, and facilitate 
transactions in securities, and, in general, protect investors and the 
public interest.\50\
---------------------------------------------------------------------------

    \48\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
    \49\ 15 U.S.C. 78f(b)(5).
    \50\ Pursuant to Section 6(b)(5) of the Exchange Act, the 
Commission must predicate approval of exchange trading for new 
products upon a finding that the introduction of the product is in 
the public interest. Such a finding would be difficult with respect 
to a product that served no investment, hedging or other economic 
functions, because any benefits that might be derived by market 
participants would likely be outweighed by the potential for 
manipulation, diminished public confidence in the integrity of the 
markets, and other valid regulatory concerns.
---------------------------------------------------------------------------

    The Commission believes that the new VIPER Shares will provide 
investors with an additional investment choice. Specifically, the 
proposal to list and trade the proposed Vanguard Funds will provide 
investors with a convenient and less expensive means of participating 
in the foreign securities markets. The Commission believes that Amex's 
proposal should advance the public interest by providing investors with 
increased flexibility in satisfying their investment needs by allowing 
them to purchase and sell single securities at negotiated prices 
throughout the business day that generally track the price and yield 
performance of the respective underlying MSCI Indices.\51\
---------------------------------------------------------------------------

    \51\ The Commission notes that, as is the case with similar 
previously approved exchange traded funds, investors in VIPER Shares 
can redeem in Creation Unit size aggregations only. See, e.g., 
Securities Exchange Act Release No. 44990 (October 25, 2001), 66 FR 
56869 (November 13, 2001) (File No. SR-Amex-2001-45).
---------------------------------------------------------------------------

    Furthermore, the proposed rule change raises no issues that have 
not been previously considered by the Commission in connection with 
earlier filings for Index Fund Shares pursuant to Rule 19b-4 under the 
Exchange Act.\52\ The VIPER Shares to be issued by the Vanguard 
International Equity Funds are similar in structure and operation to 
exchange-traded index fund shares that the Commission has previously 
approved for listing and trading on national exchanges under Section 
19(b)(2) of the Exchange Act.\53\ The stocks included in the Target 
Indices are among the stocks with the highest liquidity and market 
capitalization in their respective countries. In particular, with 
respect to each of the following key issues, the Commission believes 
that the VIPER Shares satisfy established standards.
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    \52\ 17 CFR 240.19b-4.
    \53\ 15 U.S.C. 78s(b)(2).
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A. Fund Characteristics

    Similar to other previously-approved, exchange-listed index fund 
shares, the Commission believes that the proposed VIPER Shares will 
provide investors with an alternative to trading a broad range of 
securities on an individual basis and will give investors the ability 
to trade a product representing an interest in a portfolio of 
securities designed to reflect substantially the applicable Target 
Index. The estimated cost of individual VIPER Shares, approximately $50 
to $100, should make them attractive to individual retail investors who 
wish to hold a security representing the performance of a portfolio of 
stocks. In addition, unlike the case with standard open-end investment 
companies specializing in such stocks, investors will be able to trade 
each of the VIPER Share Funds continuously throughout the business day 
in secondary market transactions at negotiated prices.\54\ Accordingly, 
the proposed Funds will allow investors to: (1) Respond quickly to 
market changes through intra-day trading opportunities; (2) engage in 
hedging strategies similar to those used by institutional investors; 
and (3) reduce transaction costs for trading a portfolio of securities.
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    \54\ Because of the potential arbitrage opportunities, the 
Commission believes that VIPER Shares will not trade at a material 
discount or premium in relation to their NAV.
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    The Commission believes that each of the proposed Funds are 
reasonably designed to provide investors with an investment vehicle 
that substantially reflects in value the applicable Target Index and, 
in turn, the performance of: (1) The component securities comprising 
the MSCI Europe Index; \55\ (2) the component securities comprising the 
MSCI Pacific Index; \56\ and (3) the Select Emerging Markets Index.\57\ 
Moreover, the Commission finds that, although the value of the VIPER 
Shares will be derived from and based on the value of the securities 
and cash held in the Fund, VIPER Shares are not leveraged instruments. 
Accordingly, the level of risk involved in the purchase or sale of 
VIPER Shares is similar to the risk involved in the purchase or sale of 
traditional common stock, with the exception that the pricing mechanism 
for the VIPER Shares is based on a portfolio of securities. The 
Commission notes that each fund will invest at least 90% of its assets 
in the component securities of its respective Target Index. As noted 
above, each Fund will use a representative portfolio sampling strategy 
to attempt to track its Underlying Index. Although a representative 
sampling strategy entails some risk of tracking error, the Advisor

[[Page 51732]]

will seek to minimize tracking error. It is expected that each Fund 
will have a tracking error relative to the performance of its 
Underlying Index of no more than 5%.
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    \55\ The MSCI Europe Index comprises 16 of the 50 countries for 
which MSCI has indices. The MSCI Europe Index is a free float-
adjusted market capitalization weighted index that is designed to 
measure developed market equity performance in Europe. As of 
December 2003, the Index contained 539 components with a total 
market capitalization exceeding $5 trillion.
    \56\ The MSCI Pacific Index comprises five of the 50 countries 
for which MSCI has indices. The MSCI Pacific Index is a free float-
adjusted market capitalization weighted index that is designed to 
measure equity market performance in the Pacific region. As of 
December 31, 2003, the Index contained 466 components with a total 
market capitalization exceeding $2 trillion.
    \57\ The Select Emerging Markets Index is comprised of 
securities included in the following standard MSCI Country Indices: 
Argentina, Brazil, Chile, China, Czech Republic, Hungary, India, 
Indonesia, Israel, Korea, Mexico, Peru, Philippines, Poland, South 
Africa, Taiwan, Thailand and Turkey. The weight of each country in 
the index is reviewed on a monthly basis. After the calculation of 
the last business day of the month, MSCI reviews the weight of each 
country in the index. If the weight of a country is above 20%, the 
initial weight of this country for the calculation of the first 
business day of the month is set to 20% and the excess amount is 
distributed among the other constituents based on their respective 
weights. The weight of the countries in the index will then 
fluctuate according to market movements until the end of the month 
when the monthly monitoring is performed once again. As of December 
31, 2003, the Index contained 533 components with a total market 
capitalization exceeding $740 billion.
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    The Advisers to each Fund may attempt to reduce tracking error by 
using a variety of investment instruments, including futures contracts, 
repurchase agreements, options, swaps and currency exchange contracts; 
however, these instruments will not constitute more than 10% of the 
Funds' assets.\58\ The Exchange represents, however, that none of the 
Funds will use these instruments to leverage, or borrow against, its 
securities holdings or for speculative purposes. Also, the Exchange 
represents that each Fund does not intend to concentrate in any 
particular industry except to the extent that its Underlying Index 
concentrates in the stocks of a particular industry or industries. As 
described above the MSCI Indices are regional indices that MSCI may 
adjust based on annual full country indeed reviews, quarterly index 
reviews, and ongoing event-related changes. Changes to the indices are 
made public via print and electronic media, and, in particular, through 
press releases on the MSCI Web site. MSCI aims to target a free float-
adjusted market representation of 85% within each country's industry 
group and uses GICS industry classifications.
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    \58\ Each of these Funds will invest not more than 10% of fund 
assets in ADRs that are not included in component securities of 
their Target Index. To the extent that these Funds invest more than 
10% of their assets in ADRs, these ADRs shall be listed on a 
national securities exchange or quoted on the Nasdaq NMS. Because 
the Target Indices do not currently contain ADRs, the Commission 
would consider a significant investment by the Funds in ADRs to be a 
material change necessitating review of these listing standards.
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    The market capitalization and liquidity of the Fund components is 
such that an adequate level of liquidity exists to allow for the 
maintenance of fair and orderly markets. Also the Fund components will 
not be highly concentrated such that the Funds become surrogates for 
trading unregistered foreign securities on the Exchange.
    While the Commission believes that these requirements should help 
to reduce concerns that the Funds could become a surrogate for trading 
in a single or a few unregistered stocks, in the event that a Fund were 
to become such a surrogate, or if the Funds' characteristics changed 
significantly from the characteristics described herein,\59\ the Funds 
would not be in compliance with the listing and trading standards 
approved herein, and the Commission would expect the Amex to file a 
proposed rule change pursuant to Rule 19b-4 of the Exchange Act if a 
Fund's Target Index. Accordingly, the level of risk involved in the 
purchase or sale of VIPER Shares is similar to the risk involved in the 
purchase or sale of traditional common stock, with the exception that 
the pricing mechanism for the VIPER Shares is based on a portfolio of 
securities.
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    \59\ For example, if the Fund substitutes a different index in 
the Target Index that the Fund currently tracks, the Exchange has 
committed to file a Form 19b-4.
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B. Disclosure

    The Commission believes that Amex's proposal should provide for 
adequate disclosure to investors relating to the terms, 
characteristics, and risks of trading the Funds. The Exchange will 
circulate an information circular detailing applicable prospectus and 
product description delivery requirements. Because the VIPER Shares 
have been granted relief from the prospectus delivery requirements of 
the 1940 Act, they will be subject to Amex Rule 1000A, which requires 
delivery of a product description describing the Funds. Pursuant to the 
rule, the delivery requirement will extend to a member or member 
organization carrying an omnibus account for a non-member broker-
dealer, who must notify the non-member to make the product description 
available to its customers on the same terms as are directly applicable 
to members and member organizations. In addition, Rule 1000A requires 
that a member or member organization must deliver a prospectus to a 
customer upon request.
    The circular also will address members' responsibility to deliver a 
prospectus or product description to all investors and highlight the 
characteristics of the Funds. The circular will also remind members of 
their suitability obligations.\60\ For example, the information 
circular will also inform members and member organizations that VIPER 
Shares are not individually redeemable, but are redeemable only in 
Creation-Unit-size aggregations as set forth in each Fund prospectus 
and statement of additional information and that local restrictions may 
cause certain funds to effect creations and redemptions for cash.\61\
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    \60\ Amex Rule 411 generally requires that members use due 
diligence to learn the essential facts relative to every customer, 
order or account accepted. Telephone conversation between Marija 
Willen, Associate General Counsel, Amex, and Brian Trackman, 
Attorney, Division, Commission, on May 26, 2004.
    \61\ See Footnote 26, supra. The information circular should 
also discuss exemptive relief granted by the Commission from certain 
rules under the Act. The applicable rules are: Rule 10a-1; Rule 10b-
10; Rule 14e-5; Rule 10b-17; Rule 11d1-2; Rules 15c1-5 and 15c1-6; 
and Rule 101 and 102 of Regulation M under the Act.
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C. Dissemination of Fund Information

    With respect to pricing, the Exchange will disseminate the recent 
NAV for each Fund on the Exchange Web site amextrader.com.\62\ As 
indicated above, each Fund's NAV will be calculated once daily as of 4 
p.m.
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    \62\ The Exchange will post additional information about each 
Fund, including dividend amounts to be paid as well. Local 
restrictions on transfers of securities currently in Greece, Taiwan, 
Korea, India, and Brazil may cause the Fund to do cash creations and 
redemptions of Creation Units to track efficiently the Target Index. 
To the extent that the Fund substitutes a new index that contain 
such restrictions, the Commission notes that the Exchange has 
committed to file a Form 19b-4.
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    The Exchange states that the value of each Fund's Target Index is 
now and will be disseminated intra-day at regular intervals (every 60 
seconds) as individual Component Securities change in price. These 
intra-day values based on the sale reporting in the foreign market of 
the Target Indices will be disseminated real time throughout the 
foreign market trading day by organizations authorized by MSCI, 
including, by subscription, from quote vendors such as Bloomberg, Dow 
Jones Markets, DRI/McGraw Hill, Lipper Analytical, Quick, Quotron, 
Reuters, and Telekurs. In addition, these organizations will 
disseminate values for each Target Index once each trading day, based 
on closing prices in the relevant exchange market.
    Amex will also disseminate by means of Consolidated Tape 
Association (``CTA'') and CQ High Speed Lines each Fund's IIV at 15-
second intervals and the market value of its VIPER Shares. The 
Commission believes that comparing these two figures will help an 
investor to determine whether, and to what extent, VIPER Shares may be 
selling at a premium or a discount to NAV.
    Amex will also make available additional information about each 
Fund, including shares outstanding, daily trading volume, share closing 
price, estimated cash amount and total cash amount per Creation Unit, 
and final dividend amounts to be paid for each Fund.\63\ The Commission 
believes that dissemination of this information will facilitate 
transparency with respect to the proposed VIPER Shares and

[[Page 51733]]

diminish the risk of manipulation or unfair informational advantage.
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    \63\ The Commission believes that the closing prices of Deposit 
Securities are readily available from, as applicable, the relevant 
exchanges, automated quotation systems, published or other public 
sources in the relevant country, or on-line information services 
such as Bloomberg or Reuters. The exchange rate information required 
to convert such information into U.S. dollars is also readily 
available in newspapers and other publications and from a variety of 
on-line services.
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    In addition, the Commission notes that Vanguard's Web site is and 
will be publicly accessible at no charge, and will contain each fund's 
NAV as of the prior business day, the Bid-Asked Price,\64\ and a 
calculation of the premium or discount of the Bid-Asked Price in 
relation to the closing NAV. Additional information available to 
investors will include data for a period covering at least the four 
previous calendar quarters (or the life of a Fund, if shorter) 
indicating how frequently each Fund's VIPER Shares traded at a premium 
or discount to NAV based on the Bid-Asked Price and closing NAV, and 
the magnitude of such premiums and discounts; the Fund's Prospectus and 
two most recent reports to shareholders; and other quantitative 
information such as daily trading volume.\65\
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    \64\ According to the Application, because the NAV for all share 
classes of all Vanguard funds is calculated as of the close of the 
NYSE (usually 4 p.m.), but the market for VIPER Shares and other 
exchange traded funds does not close until 4:15 p.m., the closing 
market price is not measured at the same time as NAV. This 
difference in timing could lead to discrepancies between performance 
based on NAV and performance based on market price that give 
investors an inaccurate picture of the correlation between the two 
figures. To remedy this problem, the Funds compare performance of a 
Fund's VIPER Shares based on NAV to performance of the VIPER Shares 
based on the mid-point of the bid-asked spread at the time NAV is 
calculated. By calculating market-based and NAV-based performance at 
the same time, the two performance figures will be comparable, and 
any differences will be attributable to market forces rather than 
timing differences.
    \65\ See supra text accompanying notes 22-23.
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    Based on the representations made in the Amex proposal, the 
Commission believes that pricing and other important information about 
each Fund is adequate, given the Funds' foreign components.

D. Listing and Trading

    The Commission finds that adequate rules and procedures exist to 
govern the listing and trading of VIPER Shares. VIPER Shares will be 
deemed equity securities subject to Amex rules governing the trading of 
equity securities, including, among others, rules governing trading 
halts,\66\ responsibilities of the specialist, account opening and 
customer suitability requirements,\67\ and the election of stop and 
stop limit orders.
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    \66\ In addition to other factors that may be relevant, the 
Exchange may consider factors such as those set forth in Amex Rule 
918C(b) in exercising its discretion to halt or suspend trading in 
Index Fund Shares, including VIPER Shares. These factors would 
include, but are not limited to: (1) The extent to which trading is 
not occurring in stocks underlying the index; or (2) whether other 
unusual conditions or circumstances detrimental to the maintenance 
of a fair and orderly market are present. In addition, trading in 
VIPER Shares will be halted if the circuit breaker parameters under 
Amex Rule 117 have been reached.
    \67\ Prior to commencement of trading, the Exchange states that 
it will issue an Information Circular informing members and member 
organizations of the characteristics of the Funds' VIPER Shares and 
of applicable Exchange rules, as well as of the requirements of Amex 
Rule 411 (Duty to Know and Approve Customers).
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    In addition, the Funds will be subject to Amex listing and 
delisting/suspension rules and procedures governing the trading of 
Index Fund Shares on the Amex.\68\ As the Commission has noted 
previously,\69\ the listing and delisting criteria for VIPER Shares 
should help to ensure that a minimum level of liquidity will exist in 
each of the Funds to allow for the maintenance of fair and orderly 
markets. Accordingly, the Commission believes that the rules governing 
the trading of VIPER Shares provide adequate safeguards to prevent 
manipulative acts and practices and to protect investors and the public 
interest.
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    \68\ See Amex Rule 1002A.
    \69\ See, e.g., Securities Exchange Act Release Nos. 44990 
(October 25, 2001), 66 FR 56869 (November 13, 2001) (File No. SR-
Amex-2001-45); and 36947 (March 8, 1996), 61 FR 10606 (March 14, 
1996) (File No. SR-Amex-95-43).
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    As noted above, the Amex expects to require that a minimum of two 
Creation Units (100,000 VIPER Shares) for each Fund to be outstanding 
at the start of trading. The Commission believes that this minimum 
number is sufficient to help to ensure that a minimum level of 
liquidity will exist at the start of trading.\70\
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    \70\ This minimum number of shares required to be outstanding at 
the start of trading is comparable to requirements that have been 
applied to previously listed series of Portfolio Depositary Receipts 
and Index Fund Shares.
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E. Surveillance

    The Commission finds that Amex has adequate surveillance procedures 
to monitor the trading of the proposed VIPER Shares, including concerns 
with specialists purchasing and redeeming Creation Units. The Amex 
represents that it will rely on existing surveillance procedures 
governing Index Fund Shares. In addition, the Exchange, Vanguard,\71\ 
and MSCI have a general policy prohibiting the distribution of 
material, non-public information by its employees. Further, based on 
MSCI's representation, the Commission finds that an adequate functional 
barrier exists between the trading desk of the broker-dealer and the 
research persons responsible for maintaining the Indices.
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    \71\ Vanguard has represented that sufficient information 
barriers exist between the Advisor and other affiliated Vanguard 
entities to prevent misuse of non-public information.
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F. Accelerated Approval

    The Commission finds good cause, pursuant to Section 19(b)(2) of 
the Exchange Act,\72\ for approving the proposed rule change, as 
amended, 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 Amex Rule 1000A 
et seq. (Index Fund Shares), and the Commission has previously approved 
similar products based on foreign indices.\73\ The Commission does not 
believe that the proposed rule change, as amended, raises novel 
regulatory issues. Consequently, the Commission believes that it is 
appropriate to permit investors to benefit from the flexibility 
afforded by trading these products as soon as possible. Accordingly, 
the Commission finds that there is good cause, consistent with Section 
6(b)(5) of the Act,\74\ to approve the proposal on an accelerated 
basis.
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    \72\ 15 U.S.C. 78s(b)(2).
    \73\ See, e.g., Securities Exchange Act Release Nos. 44990 
(October 25, 2001), 66 FR 56869 (November 13, 2001) (File No. SR-
Amex-2001-45); 42748 (May 2, 2000), 65 FR 30155 (May 10, 2000); and 
36947 (March 8, 1996), 61 FR 10606 (March 14, 1996) (File No. SR-
Amex-95-43).
    \74\ 15 U.S.C. 78s(b)(5).
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V. Conclusion

    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change, as amended (SR-Amex-2004-05), is hereby 
approved on an accelerated basis.\75\
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    \75\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\76\
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    \76\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-19067 Filed 8-19-04; 8:45 am]
BILLING CODE 8010-01-P