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Fund expense ratio changes reported in May 2013

May 30, 2013

In May 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.

A change in a fund's expense ratio may also reflect superior or subpar performance. When we hire an advisory firm to manage or co-manage an actively managed fund, the contract usually includes performance-based bonuses and penalties. When performance exceeds that of a specified benchmark, the advisor's compensation increases. When performance falls short, the advisor's compensation declines, aligning the interests of the advisory firm with those of the fund's shareholders.

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
expense ratio
expense ratio*
Effective date
Dividend Appreciation Index Fund ETF 0.13%    0.10% Arrow 05/28/2013
Dividend Appreciation Index Fund Investor 0.25%    0.20% Arrow 05/28/2013
Dividend Growth Fund Investor 0.31%    0.29% Arrow 05/28/2013
Energy Fund Admiral 0.28%    0.26% Arrow 05/28/2013
Energy Fund Investor 0.34%    0.31% Arrow 05/28/2013
GNMA Fund Admiral 0.11% 0.11% 05/30/2013
GNMA Fund Investor 0.21% 0.21% 05/30/2013
Health Care Fund Admiral 0.30% 0.30% 05/28/2013
Health Care Fund Investor 0.35% 0.35% 05/28/2013
High-Yield Corporate Fund Admiral 0.13% 0.13% 05/30/2013
High-Yield Corporate Fund Investor 0.23% 0.23% 05/30/2013
Intermediate-Term Investment-Grade Fund Admiral 0.10% 0.10% 05/30/2013
Intermediate-Term Investment-Grade Fund Investor 0.20% 0.20% 05/30/2013
Intermediate-Term Treasury Fund Admiral 0.10% 0.10% 05/30/2013
Intermediate-Term Treasury Fund Investor 0.20% 0.20% 05/30/2013
Long-Term Investment-Grade Fund Admiral 0.12% 0.12% 05/30/2013
Long-Term Investment-Grade Fund Investor 0.22% 0.22% 05/30/2013
Long-Term Treasury Fund Admiral 0.10% 0.10% 05/30/2013
Long-Term Treasury Fund Investor 0.20% 0.20% 05/30/2013
Precious Metals Fund Investor 0.29%    0.26% Arrow 05/28/2013
REIT Index Fund Admiral 0.10% 0.10% 05/28/2013
REIT Index Fund ETF 0.10% 0.10% 05/28/2013
REIT Index Fund Investor 0.24% 0.24% 05/28/2013
REIT Index Fund Signal® 0.10% 0.10% 05/28/2013
Short-Term Federal Fund Admiral 0.10% 0.10% 05/30/2013
Short-Term Federal Fund Investor 0.20% 0.20% 05/30/2013
Short-Term Investment-Grade Fund Admiral 0.11%    0.10% Arrow 05/30/2013
Short-Term Investment-Grade Fund Investor 0.20% 0.20% 05/30/2013
Short-Term Treasury Fund Admiral 0.10% 0.10% 05/30/2013
Short-Term Treasury Fund Investor 0.20% 0.20% 05/30/2013

*As of the fund's most recent prospectus.


  • All investing is subject to risk, including the possible loss of the money you invest.
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