Fund expense ratio changes reported in March
March 28, 2013
In March 2013, updated prospectuses for certain Vanguard mutual funds reported expense ratio changes, as noted in the table below. Other funds reported no changes.
Why this matters
Because your investment costs directly affect your net returns, Vanguard believes it's important for you to be aware of your mutual funds' expense ratios—in essence, the portions of the funds' operating expenses passed on to you and other shareholders, expressed as a percentage of their total assets.
How we're different
Unlike many other fund companies, Vanguard doesn't generate profits for private owners. Instead, our unique corporate structure—along with our relentless focus on keeping operating costs low—has resulted in savings that let our client-owners* keep more of their returns.
While we're firmly committed to reducing costs, we don't do so simply for the sake of appearances. Vanguard's history of low costs is rooted in our corporate philosophy—it's not a marketing gimmick.
*Vanguard is client-owned. As a client owner, you own the funds that own Vanguard.
A fund's expense ratio may change from year to year in response to changes in its assets and/or changes in the cost of managing it. For example, economies of scale resulting from an increase in assets due to market appreciation or investor cash flow can result in a reduction, while a decline in assets can cause the expense ratio to rise.
What these changes mean for you
Each percentage point in an expense ratio represents an annual charge of $100 against every $10,000 you invest in that fund.
A hypothetical fund with a 0.50% expense ratio charges its shareholders $50 for every $10,000 invested, so a reduction from 0.50% to 0.25% would represent a savings of $25 for every $10,000 you've invested. An increase from 0.25% to 0.35% would represent an additional charge of $10 for every $10,000 invested.
Expenses: an important factor, but not the only one
While we believe investment costs should be an important part of your decision-making process, a change in a fund's expense ratio, whether up or down, shouldn't necessarily be the only reason you buy or sell shares.
You also need to consider your personal financial goals, your time frame, and your tolerance for bearing the risks of investing. And don't overlook the potential tax implications of your decisions, as taxes can be viewed as another cost of investing, and can impact your net returns.
Also, think carefully before basing any investment decision on performance. Buying a fund solely because it's done well in the past, or selling a fund that has performed poorly, can turn into a costly mistake—a mistake that may outweigh the considerable benefits of a low expense ratio.
|Vanguard fund||Share class||Former
|Balanced Index Fund||Admiral||0.10%||0.10%||03/28/2013|
|Balanced Index Fund||Investor||0.24%||0.24%||03/28/2013|
|Balanced Index Fund||Signal®||0.10%||0.10%||03/28/2013|
|California Intermediate-Term Tax-Exempt Fund||Admiral||0.12%||0.12%||03/28/2013|
|California Intermediate-Term Tax-Exempt Fund||Investor||0.20%||0.20%||03/28/2013|
|California Long-Term Tax-Exempt Fund||Admiral||0.12%||0.12%||03/28/2013|
|California Long-Term Tax-Exempt Fund||Investor||0.20%||0.20%||03/28/2013|
|California Tax-Exempt Money Market Fund||Investor||0.17%||0.16%||03/28/2013|
|Convertible Securities Fund||Investor||0.59%||0.52%||03/27/2013|
|Florida Focused Long-Term Tax-Exempt Fund||Admiral||0.12%||0.12%||03/28/2013|
|Florida Focused Long-Term Tax-Exempt Fund||Investor||0.20%||0.20%||03/28/2013|
|Managed Payout Distribution Focus Fund||Investor||0.46%||0.51%||03/28/2013|
|Managed Payout Growth and Distribution Focus Fund||Investor||0.40%||0.43%||03/28/2013|
|Managed Payout Growth Focus Fund||Investor||0.34%||0.35%||03/28/2013|
|Massachusetts Tax-Exempt Fund||Investor||0.17%||0.16%||03/28/2013|
|New Jersey Long-Term Tax-Exempt Fund||Admiral||0.12%||0.12%||03/28/2013|
|New Jersey Long-Term Tax-Exempt Fund||Investor||0.20%||0.20%||03/28/2013|
|New Jersey Tax-Exempt Money Market Fund||Investor||0.17%||0.16%||03/28/2013|
|New York Long-Term Tax-Exempt Fund||Admiral||0.12%||0.12%||03/28/2013|
|New York Long-Term Tax-Exempt Fund||Investor||0.20%||0.20%||03/28/2013|
|New York Tax-Exempt Money Market Fund||Investor||0.17%||0.16%||03/28/2013|
|Ohio Long-Term Tax-Exempt Fund||Investor||0.17%||0.16%||03/28/2013|
|Ohio Tax-Exempt Money Market Fund||Investor||0.17%||0.16%||03/28/2013|
|Pennsylvania Long-Term Tax-Exempt Fund||Admiral||0.12%||0.12%||03/28/2013|
|Pennsylvania Long-Term Tax-Exempt Fund||Investor||0.20%||0.20%||03/28/2013|
|Pennsylvania Tax-Exempt Money Market Fund||Investor||0.17%||0.16%||03/28/2013|
*As of the fund's most recent prospectus.
- All investing is subject to risk, including the possible loss of the money you invest.
- An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.
- Bond funds are subject to the risk that an issuer will fail to make payments on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer's ability to make payments.
- The Managed Payout Funds are not guaranteed to achieve their investment objectives, are subject to loss, and some of their distributions may be treated in part as a return of capital. The dollar amount of a fund’s monthly cash distributions could go up or down substantially from one year to the next and over time. It is also possible for a fund to suffer substantial investment losses and simultaneously experience additional asset reductions as a result of its distributions to shareholders under its managed distribution policy. An investment in a fund could lose money over short, intermediate, or even long periods of time because each fund allocates its assets worldwide across different asset classes and investments with specific risk and return characteristics. Diversification does not necessarily ensure a profit or protect against a loss in a declining market. The funds are proportionately subject to the risks associated with their underlying funds, which may invest in stocks (including stocks issued by REITs), bonds, cash, inflation-linked investments, commodity-linked investments, long/short market neutral investments, and leveraged absolute return investments.
- Although the income from a municipal bond fund is exempt from federal tax, you may owe taxes on any capital gains realized through the fund's trading or through your own redemption of shares. For some investors, a portion of the fund's income may be subject to state and local taxes, as well as to the federal Alternative Minimum Tax.