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Subject:  Re: is a "fund of funds" a good idea? Date:  4/7/2002  9:33 PM
Author:  rkmacdonald Number:  34115 of 96092

Author: CentexHorn Date: 4/7/02 6:56 PM Number: 34114
Are you saying Vanguard does not have this extra layer of fees? That the .25% or whatever they show is the REAL cost?

That is correct. Vanguard does not charge any additional fees for managing their Life Strategy 'Fund of Funds'. They charge only the normal expense ratios for the underlying funds. I use the Vanguard Conservative Growth Fund (VSCGX) for some of my highly conservative money.

You can view (and download) the prospectus for all of the Vanguard Life Strategy Funds at:

Exerpt from prospectus:
LifeStrategy Conservative Growth Fund

The Fund seeks to provide current income and low to moderate growth of capital.

The Fund invests in other Vanguard mutual funds according to a fixed formula that typically
results in an allocation of about 60% of assets to bonds and 40% to common stocks. The
percentages of the Fund's assets allocated to each of the underlying funds are:
n Vanguard Total Bond Market Index Fund 30%
n Vanguard Asset Allocation Fund 25%
n Vanguard Short-Term Corporate Fund 20%
n Vanguard Total Stock Market Index Fund 20%
n Vanguard Total International Stock Index Fund 5%
The following table describes the fees and expenses you may pay if you buy and hold shares of the Fund. The expenses shown under Annual Fund Operating Expenses are based on those incurred in the fiscal period ended October 31, 2001.

SHAREHOLDER FEES (fees paid directly from your investment)
Sales Charge (Load) Imposed on Purchases: None
Sales Charge (Load) Imposed on Reinvested Dividends: None
Redemption Fee: None
Exchange Fee: None
ANNUAL FUND OPERATING EXPENSES (expenses deducted from the Fund's assets)

Total Annual Fund Operating Expenses: None*

*Although LifeStrategy Conservative Growth Fund is not expected to incur any net expenses directly, the Fund's shareholders indirectly bear the expenses of the underlying Vanguard funds in which the Fund invests. See The Funds and Vanguard. The Fund's indirect expense ratio, based on its underlying investments, was 0.28% as of October 31, 2001.

Not a bad deal if you ask me!! Just about the simplest asset allocation strategy I have ever found.

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