Vanguard mutual funds

Share classes

Vanguard offers multiple mutual fund share classes. A fund's objective, management, and underlying investments are identical in each class. The expense ratios distinguish the share classes and reflect the differing costs of each share class.

• Investor Shares. Low-cost shares for individual investors. Investor Shares for most funds have minimum initial investments of $3,000, with some as low as $1,000.
• Admiral™ Shares. Lower-cost shares available to Vanguard investors with at least $10,000 in most index funds and $50,000 in actively managed funds.
  See how Admiral Shares help lower your costs ››
• Institutional Shares. Shares for companies and organizations with account balances of $5 million or more.

Tax-exempt funds

Tax-exempt funds seek to provide current income that is exempt from federal personal income taxes. You might consider a tax-exempt fund if:

• You're not investing in a tax-advantaged account (these include 401(k)s, IRAs, and 529s).
• You're in a higher federal tax bracket (28% or higher).
  See if tax-exempt investing is right for you ››

Tax-managed funds

Tax-managed funds aim to minimize the impact of taxes on investors' total returns. They're specifically managed to:

• Minimize portfolio turnover.
• Minimize capital gains when selling shares.
• Avoid securities that provide taxable dividend income.

SEC yield

A non-money market fund's SEC yield is based on a formula mandated by the Securities and Exchange Commission (SEC) that calculates a fund's hypothetical annualized income, as a percentage of its assets. A security's income, for the purposes of this calculation, is based on the current market yield to maturity (in the case of bonds) or projected dividend yield (for stocks) of the fund's holdings over a trailing 30 day period. This hypothetical income will differ (at times, significantly) from the fund's actual experience; as a result, income distributions from the fund may be higher or lower than implied by the SEC yield.

The SEC yield for a money market fund is calculated by annualizing its daily income distributions for the previous seven days.

Record date

The date used to determine who is eligible to receive a company or fund's next distribution of dividends or capital gains.

Reinvest date

The date on which an investment's dividend or capital gains distribution is reinvested, if requested by the shareholder, to purchase additional shares. Also known as the ex-dividend date.

Payable date

The date when dividends or capital gains are paid to shareholders. For Vanguard mutual funds, the payable date is usually within two to four days of the record date. The payable date also refers to the date on which a declared stock dividend or bond interest payment is scheduled to be paid.

Distribution yield

The fund's current monthly income dividend per share, annualized (by dividing by the number of days in the month and multiplying by 365) and shown as a percentage of the fund's average net asset value (NAV) during the month.

Purchase fee

A fee charged by some mutual funds when an investor buys shares. The fee isn't a sales charge or load because it's paid directly to the fund to offset the costs of trading certain securities.

Redemption fee

A fee charged by some mutual funds and brokers when an investor sells shares within a specified, usually short, period of time. When charged by a mutual fund, a redemption fee differs from a back-end load because the money is paid back into the fund. Mutual funds generally adopt such fees to discourage market-timing.

Earnings growth rate

The average annual rate of growth in earnings over the past five years for the stocks in a portfolio.

P/E ratio

The price per share of a stock divided by its per-share earnings over the past year. For a portfolio, the ratio is the weighted average price/earnings ratio of the stocks it holds.

P/B ratio

The price per share of a stock divided by its book value (i.e., net worth) per share. For a portfolio, the ratio is the weighted average price/book ratio of the stocks it holds.

Return on equity

The amount, expressed as a percentage, earned on a company's common stock investment for a specific time frame. This figure tells shareholders how effectively their money is being utilized.

Beta

A measure of the magnitude of a portfolio's past share-price fluctuations in relation to the ups and downs of the overall market (or appropriate market index). The market (or index) is assigned a beta of 1.00, so a profile with a beta of 1.20 would have seen its share price rise or fall by 12% when the overall market rose or fell by 10%. At Vanguard, beta is based on returns over the past 36 months for both the fund and the index.

R-squared

A measure of how much of a portfolio's performance can be explained by the returns from the overall market (or a benchmark index). If a portfolio's total return precisely matched that of the overall market or benchmark, its R-squared would be 1.00. If a portfolio's return bore no relationship to the returns of the market or benchmark, its R-squared would be 0. At Vanguard, R-squared is based on returns over the past 36 months for both the fund and the index.

Duration

A measure of the sensitivity of bond—and bond mutual fund—prices to interest rate movements. For example, if a bond has a duration of two years, its price would fall about 2% when interest rates rose one percentage point. On the other hand, the bond's price would rise by about 2% when interest rates fell by one percentage point.

Yield to maturity

The rate of return an investor would receive if a security is held to its maturity date.

Average Effective Maturity (taxable bond funds and balanced funds except Tax-Managed Balanced)

Average Effective Maturity is defined as the average length of time until fixed income securities held by a fund reach maturity and are repaid, taking into consideration that an action such as a call or refunding may cause some bonds to be repaid before they mature.

Average Stated Maturity (municipal bond funds and Tax-Managed Balanced)

Average Stated Maturity represents the average of the stated maturity dates for all fixed income securities held by the fund.

Average Maturity (money market funds only)

Average maturity represents the weighted average maturity of the fund's holdings using the date of the next interest rate adjustment for certain adjustable-rate securities held by the fund.