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Vanguard May Offer VIPERs on Two Other Funds


The Vanguard Group may add an exchange-traded share class to its Small Cap Index Fund and its Total Stock Market Fund, according to Brian Mattes, a company spokesperson.

The Small Cap Index Fund tracks the Russell 2000 index and the Total Stock Market Fund tracks the Wilshire 5000 index. The new share class, Vanguard Index Participation Receipts (VIPERs), are covered under existing licensing agreements and Vanguard has notified both indexes of its plans to attach the share class, Mattes said.

Late last month, Vanguard lost a court battle with Standard & Poor's, a unit of McGraw-Hill Companies, both of New York, delaying the issuance of the new share class. Vanguard wanted to add VIPERs to three of its index funds that track S&P indexes. McGraw-Hill sued Vanguard for violating the terms of its licensing agreement claiming that VIPERs were not covered under the agreement. U.S. District Court Judge Alvin K. Hellerstein ruled in McGraw-Hill's favor, saying that VIPERs represent a separate product and are therefore not covered under the licensing agreement.

Vanguard is planning to appeal Hellerstein's decision, Mattes said.