August 12, 2004

Vanguard Plans to Launch REIT-based ETF

Aug. 5, 2004 - The Vanguard Group plans to introduce a new exchange-traded fund (ETF), which will be offered as a separate class of its existing Vanguard REIT Index Fund (VGSIX), according to an SEC filing dated July 30.

Vanguard's ETFs are called Vanguard Index Participation Equity Receipts, or VIPERS, all of which exist as share classes of certain of Vanguard's Index funds. Vanguard currently has sixteen VIPERs.

The REIT ETF will feature total annual operating expenses of 0.18%, whereas the REIT Index fund carried an expense ratio of 0.24%. Vanguard will impose a $50 fee if a shareholder seeks to convert conventional fund shares into VIPER shares.

Managed by George U. Sauter, the $4.5-billion REIT Index fund is up 5.6% so far this year through June, after gaining 35.7% in calendar 2003.

The new REIT ETF is expected to be launched on September 23.

According to the Investment Company Institute, ETF assets totaled about $178.5 billion at the end of June.

Contact Robert F. Keane with questions or comments at: bkeane@investmentadvisor.com.

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