61010 Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Notices

purchase and redeem Creation Units

from the Fund.

16. Section 17(b) authorizes the

Commission to exempt a proposed

transaction from section 17(a) if

evidence establishes that the terms of

the transaction, including the

consideration to be paid or received, are

reasonable and fair and do not involve

overreaching, and the proposed

transaction is consistent with the

policies of the registered investment

company and the general provisions of

the Act. Applicants contend that no

useful purpose would be served by

prohibiting persons affiliated with a

Fund, as described above, from

purchasing or redeeming Creation Units

from the Fund. Applicants represent

that Fund affiliates making in-kind

purchases and redemptions would be

treated no differently from non-affiliates

making the same types of transactions.

Applicants state that all purchases and

redemptions of Creation Units would be

at the Fund’s next calculated NAV.

Applicants also state that, in all cases,

Deposit Securities and Redemption

Securities will be valued in the same

manner, using the same standards, as

those securities are valued for purposes

of calculating the Fund’s NAV.

Applicants assert that, for these reasons,

the requested relief meets the standards

of sections 6(c) and 17(b).

Applicants’ Conditions

Applicants agree that the order

granting the requested relief will be

subject to the following conditions:

1. No portfolio of Index Trust other

than the Funds will issue a class of

VIPER Shares unless applicants have

requested and received with respect to

such portfolio either exemptive relief

from the Commission or a no-action

letter from the Division of Investment

Management of the Commission.

2. The VIPER Shares Prospectus and

the Product Description for each Fund

will clearly disclose that, for purposes

of the Act, VIPER Shares are issued by

the Fund and that the acquisition of

VIPER Shares by investment companies

is subject to the restrictions of section

12(d)(1) of the Act.

3. As long as a Fund operates in

reliance on the requested order, the

VIPER Shares will be listed on an

Exchange.

4. The VIPER Shares of a Fund will

not be advertised or marketed as shares

of an open-end investment company or

mutual fund. The VIPER Shares

Prospectus of each Fund will

prominently disclose that VIPER Shares

are not individually redeemable and

will disclose that holders of VIPER

Shares may acquire those shares from

the Fund and tender those shares for

redemption to the Fund in Creation Unit

aggregations only. Any advertised

material that describes the purchase or

sale of Creation Units or refers to

redeemability will prominently disclose

that VIPER Shares are not individually

redeemable and that holders of VIPER

Shares may acquire those shares from

the Fund and tender those shares for

redemption to the Fund in Creation Unit

aggregations only.

5. Before a Fund may rely on the

order, the Commission will have

approved, pursuant to rule 19b–4 under

the Securities Exchange Act of 1934, an

Exchange rule requiring Exchange

members and member organizations

effecting transactions in VIPER Shares

to deliver a Product Description to

purchasers of VIPER Shares.

6. On an annual basis, the Board,

including a majority of trustees who are

not interested persons of Index Trust,

must determine, for each Fund, that the

allocation of distribution expenses

among the classes of Conventional

Shares and VIPER Shares in accordance

with the Multi-Class Distribution

Formula is in the best interests of each

class and of the Fund as a whole. Index

Trust will preserve for a period of not

less than six years from the date of a

Board determination, the first two years

in an easily accessible place, a record of

the determination and the basis and

information upon which the

determination was made. This record

will be subject to examination by the

Commission and its staff.

7. For six years following the issuance

of a Fund’s VIPER Shares, the Fund will

(i) record and preserve any investor

complaints or reports of confusion

concerning the Exchange Option that

are communicated to the Fund, VGI,

and/or VMC; and (ii) record data

tracking the number of investors that,

after VIPER Shares are offered, purchase

the Fund’s Conventional Shares and,

within 90 days, exchange those shares

for VIPER Shares. The Fund will

preserve this information in an easily

accessible place, and the information

will be subject to examination by the

Commission and its staff.

8. Applicant’s website, which is and

will be publicly accessible at no charge,

will contain the following information,

on a per VIPER Share Basis, for each

Fund: (i) The prior business day’s NAV

and the closing market price, and a

calculation of the premium or discount

of the closing market price in relation to

the NAV; and (ii) 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

daily closing market price, and the

magnitude of such premiums and

discounts. In addition, the Product

Description for each Fund will state that

applicants’ website has information

about the premiums and discounts at

which the Fund’s VIPER Shares have

traded.

9. The VIPER Shares Prospectus and

annual report will include, for each

Fund: (i) the information listed in

condition 8(ii), (a) in the case of the

VIPER Shares Prospectus, for the most

recently completed calendar year (and

the most recently completed quarter or

quarters, as applicable), and (b) in the

case of the annual report, for no less

than the immediately preceding five

fiscal years (or the life of the Fund, if

shorter); and (ii) the cumulative total

return and the average annual total

return for one, five, and ten year periods

(or the life of the Fund, if shorter) of (a)

a VIPER Share based on NAV and

market price, and (b) the Fund’s Index.

By the Commission.

Jonathan G. Katz,

Secretary.

[FR Doc. 00–26380 Filed 10–12–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

Sunshine Act Meeting

Agency Meeting

Notice is hereby given, pursuant to

the provisions of the Government in the

Sunshine Act, Pub. L. 94–409, that the

Securities and Exchange Commission

will hold the following meeting during

the week of October 16, 2000.

A closed meeting will be held on

Tuesday, October 17, 2000 at 10:30 a.m.

Commissioners, Counsel to the

Commissioners, the Secretary to the

Commission, and recording secretaries

will attend the closed meeting. Certain

staff members who have an interest in

the matters may also be present.

The General Counsel of the

Commission, or his designee, has

certified that, in his opinion, one or

more of the exemptions set forth in 5

U.S.C. 552b(c)(4), (8), (9)(A) and (10)

and 17 CFR 200.402(a)(4), (8), (9)(A) and

(10), permit consideration for the

scheduled matters at the closed meeting.

The subject matters of the closed

meeting scheduled Tuesday, October 17,

2000 will be:

Institution and settlement of injunctive

actions; and

Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Notices 61011

1 15 U.S.C. 78s(b)(1).

2The American Stock Exchange, Inc. has filed a

similar proposed rule change SR-Amex-00–46. See

Securities Exchange Act Release No. 43419 (Oct. 6,

2000).

3Amendment No. 1 changes the section under

which the proposed rule change was filed from

Section 19(b)(3) to Section 19(b)(2) of the Act and

made other technical changes. See Letter from

Edward Knight, Executive Vice President and Chief

Legal Officer, Nasdaq, to Katherine A. England,

Assistant Director, SEC (Oct. 2, 2000).

4Nasdaq understands that the Commission

believes that this activity is not appropriate under

Section 5 of the Securities Act of 1933. See 15

U.S.C. 77e.

Institution and settlement of

administrative proceedings of an

enforcement nature

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact:

The Office of the Secretary at (202)

942–7070.

Dated: October 10, 2000.

Jonathan G. Katz,

Secretary.

[FR Doc. 00–26461 Filed 10–11–00; 11:29

am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43420; File No. SR–NASD–

00–50]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

National Association of Securities

Dealers, Inc. Relating to the Definition

of ‘‘Public Offering’’ for Purposes of

Nasdaq’s Shareholder Approval Rules

October 6, 2000.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

August 11, 2000, The National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’), through its

wholly owned subsidiary, The Nasdaq

Stock Market, Inc. (‘‘Nasdaq’’) filed with

the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the NASD.2 On

October 4, 2000, the Nasdaq filed

Amendment No. 1 to the proposed rule

change.3 The Commission is publishing

this notice to solicit comments on the

proposed rule change from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Nasdaq is filing with the Commission

a proposed rule change regarding the

adoption of interpretive material

defining ‘‘Public Offering’’ for purposes

of Nasdaq’s shareholder approval rules.

Below is the text of the proposed rule

change. All text is being added.

* * * * *

IM–4310–2. Definition of a Public Offering

Marketplace Rules 4310(c)(25)(G)(i)(d),

4320(e)(21)(G)(i)(d), and 4460(i)(1)(D)

provide that shareholder approval is required

for the issuance of common stock (or

securities convertible into or exercisable for

common stock) equal to 20 percent or more

of the common stock or 20 percent or more

of the voting power outstanding before the

issuance for less than the greater of book or

market value of the stock. Under these rules,

however, shareholder approval is not

required for a ‘‘public offering.’’

Issuers are encouraged to consult with

Nasdaq staff in order to determine if a

particular offering is a ‘‘public offering’’ for

purposes of the shareholder approval rules.

Generally, a firm commitment underwritten

securities offering registered with the

Commission will be considered a public

offering for these purposes. Likewise, any

other securities offering which is registered

with the Commission and which is publicly

disclosed and distributed in the same general

manner and extent as a firm commitment

underwritten securities offering will be

considered a public offering for purposes of

the shareholder approval rules. However,

Nasdaq staff will not treat an offering as a

‘‘public offering’’ for purposes of the

shareholder approval rules merely because

they are registered with the Commission

prior to the closing of the transaction.

When determining whether an offering is

a ‘‘public offering’’ for purposes of these

rules, Nasdaq staff will consider all relevant

factors, including but not limited to:

(i) the type of offering (including whether

the offering is conducted by an underwriter

on a firm commitment basis, or an

underwriter or placement agent on a bestefforts basis, or whether the offering is selfdirected by the issuer);

(ii) the manner in which the offering is

marketed (including the number of investors

offered securities, how those inventors were

chosen, and the breadth of the marketing

effort);

(iii) the extent of the offering’s distribution

(including the number and identity of the

investors who participate in the offering and

whether any prior relationship existed

between the issuer and those investors);

(iv) the offering price (including the extent

of any discount to the market price of the

securities offered); and

(v) the extent to which the issuer controls

the offering and its distribution.

* * * * *

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

NASD 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 statement

may be examined at the places specified

in Item IV below. The NASD 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

(a) Purpose

Nasdaq rules require shareholder

approval for stock issuances of 20

percent or more of an issuer’s total

shares outstanding, offered at less than

the greater of book or market value. The

applicable rules further provide,

however, that shareholder approval is

not required for a ‘‘public offering,’’

although that term is not defined in the

rules. Recently, a number of issuers

have inquired as to whether certain

large, below-market offerings were

‘‘public offerings’’ because the

transactions, which were initiated

pursuant to exceptions to the

registration requirements, were

registered with the Commission prior to

closing the transactions.4 Historically,

for purposes of assessing the

applicability of the shareholder

approval rules, Nasdaq staff has

interpreted ‘‘public offering’’ as a

broadly distributed, registered offering

based on a firm commitment

underwriting. Conversely, staff does not

consider a transaction to be a ‘‘public

offering’’ for these purposes when the

transaction is of limited distribution

and/or is not based on a firm

commitment underwriting, even if the

offering was registered. Because the

offerings described had limited

distributions and, in some cases, the

offerees were pre-determined by the

issuer, Nasdaq believed that these

transactions were not ‘‘public offerings’’

for purposes of the shareholder approval

rules.

In order to ensure that all issuers

understand how Nasdaq will determine

whether a transaction is a ‘‘public

offering’’ for purposes of the

shareholder approval rules, Nasdaq has

prepared the proposed Interpretative

Material. Determinations as to whether

a transaction is a ‘‘public offering’’ for

purposes of these rules will be made

based on the facts and circumstances

surrounding each particular transaction.