Path: bloom-picayune.mit.edu!enterpoop.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.ibd From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Making Money In The Mutual Date: Wed, 25 Nov 92 12:57:53 EST Message-ID: <14.1992Nov25.125753@AmeriCast.com> Lines: 93 11/25/92 TITLE Making Money In The Mutual Vanguard Debuts Low-Cost Treasury Funds Neuberger Plans NAV Split; T. Rowe Offers Keogh Booklet Doug Rogers Vanguard Group has introduced Vanguard Admiral Funds - a series of no-load U.S. Treasury portfolios with expense ratios that are far below the expense ratio of prevailing U.S. Treasury funds. The Admiral Funds comprise four portfolios: Money Market, Short-Term, Intermediate- Term and Long-Term. The expense ratio of Admiral Funds is expected to be 0.15%. This compares with 0.53% average expense ratio for U.S. Treasury money market funds and the 0.93% average expense ratio for U.S. Treasury bond funds, according to Lipper Analytical Services Inc. The operating expense is the fee charged for the cost of running the fund, and is expressed as an annual percentage of total net sales. At 0.15%, for example, an investor whose account averaged $10,000 in a year would pay $15. "In today's low-interest rate environment, the Admiral Funds' expectionally low costs can pro- vide a meaningful contribution to an investor's total return, without any additional risk," said John Bogle, chairman of Valley Forge, Pa.-based Vanguard. "Through the Admiral Funds' lower cost, AAA rated Portfolios, an investor could earn the high current yields equivalent to those of many high-cost, BBB quality bond fund portfolios." The funds will derive their low-cost ad- vantage from the considerable economies of scale that will be realized by high average account balances; the minimum intitial investment for the funds will be $50,000. "Unlike our competi- tors' 'low-cost' funds, Vanguard Admiral Funds' significant cost savings will be sustainable and real, and not the result of fre- quently misleading fee waivers," Bogle said. Exchanges and unlim- ited checkwriting - with a $250 per-check minimum -are offered at no charge. The money market portfolio will invest in securities with an average weighted maturity of 90 days or less. The short- term portfolio's average maturity is targarted at one to three years. The intermediate portfolio's maturity is to range between five and 10 years, and the long-term portfolio's maturity will cover 15 to 30 years. *** Neuberger & Berman Guardian Fund is planning to split 3-for-1 on Jan. 20. The split is being paid through a 200% stock dividend. On the payable date, Jan. 20 - which is also the ex-dividend date, each shareholder will receive two additional shares of the fund for each one owned. The price and net asset value per share will be reduced to one- third the price before the dividend, but each shareholder will own three times as many shares, with no change in the value of the investment. For example, the $50.56 NAV of Nov. 20 would be $16.85 if it had undergone a 3-for-1 split. A shareholder with, say, $1,000 in- vested on Jan. 19 with a theoretical NAV of $50 would own 20 shares. On Jan. 20, the shareholder would own 60 shares, but the NAV would be lowered to $16.67. Thus, the shareholder would still have $1,000 in his or her account. Of course, the daily market fluctuations in the NAV would affect the value of the shareholders investment, so that the $1,000 ac- count would be higher or lower on Jan. 20 than the day before, even without the split. The fund, rated B by Investor's Business Daily for its 1989- 91 total return of 56%, is up 14% this year. "Guardian Fund's per- formance has been superior, and demand for the fund, strong," said Stanley Egener, president of Neuberger & Berman Management Inc. A company spokesperson said the split should have no tax consequences for shareholders. That's because the dividend isn't generated from the profits of companies in the portfolio or by gains realized through trading the portfolio. *** T. Rowe Price is offering a new guide on Keogh retirement plans designed for self-employed individuals and businesses with five or fewer employees. The Small-Business Owner's Guide to Keogh Plans is available free and can be ordered by calling (800) 638-3006. The guide explains the pros and cons of three different types of Keogh plans - a profit-sharing plan, a money purchase pension plan and a paired plan. It also explains the advantages a Keogh account offers for retirement savings. A Keogh plan allows self-employed individu- als and small-business owners to contribute the lesser of $30,000 or 25% of compensation per eligible employee on a pretax basis to a retirement plan. New plans must be established by Dec. 31 and contributions must be made by the company's tax-filing deadline. ATDT9,12135877514ATDT9,12135877514ATDT9,12135877514+++IsFEAH This article is copyright 1992 Investors Business Daily. Redistribu- tion to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send- email to usa@AmeriCast.COM