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 VALLEY FORGE, Pa., Dec. 9 /PRNewswire/ -- The Vanguard Group of Investment Companies will no longer assess an annual $10 custodial fee for IRA portfolio accounts with assets of $5,000 or more, effective Jan. 1, 1994.
 "The elimination of the $10 fee will heighten Vanguard's already formidable low-cost advantage in an increasingly competitive retirement plan marketplace," said Vanguard Chairman John C. Bogle. "We expect that the new IRA fee policy -- when combined with our Funds' low expenses and lack of sales commissions -- will clearly make Vanguard the investment of choice among cost-conscious IRA investors."
 Vanguard Funds do not charge either sales commissions ("loads") or 12b-1 fees, and their operating expenses are virtually the lowest in the mutual fund industry. Vanguard's average expense ratio (i.e., annual operating expenses expressed as a percentage of a fund's average net assets) is 0.31 percent, or $3.10 of every $1,000 invested. By comparison, the expense ratio for the average mutual fund is 1.03 percent (Lipper Analytical Services data), or $10.30 of every $1,000 invested -- more than three times as much as Vanguard.
 For an IRA planholder with a balance of $5,000, the annual costs of investing in a representative Vanguard Fund would total $16. For the same IRA planholder in the average mutual fund, the costs would amount to $53. For a $10,000 IRA account, the respective costs are $32 and $105.
 The fee waiver applies to the following plans: contributory IRAs, rollover IRAs, SEP IRAs, and beneficiary IRAs. Each IRA portfolio account will be reviewed annually to determine if it is exempt from the custodial fee. (In January 1993, Vanguard waived its annual $10 IRA custodial fee for individuals whose aggregate Vanguard IRA assets totaled $50,000 or more. This policy will remain in effect.) The $10 custodial fee will continue to apply to Vanguard Retirement Plan (VRP) and 403(b)(7) accounts. The $10 custodial fee is charged to IRAs to cover the higher costs associated with trusteed retirement accounts, including Federal government reporting, staff training, and document preparation and administration. At Vanguard's current $125 billion net asset level, the loss in IRA fee revenue is not expected to have a discernible impact on Vanguard Fund expense ratios.
 "Expenses will become an important differentiating factor as mutual fund companies seek a larger slice of the retirement plan market," said Bogle, who noted that the industry has enjoyed extraordinary growth in IRA assets over the past decade.
 At year-end 1992, IRA assets invested in the nation's mutual funds totaled $211 billion, which is a twenty-fold increase over the $10.8 billion invested at year-end 1983, according to the Investment Company Institute, an industry trade organization based in Washington. Mutual funds currently hold about 29 percent of the $725 billion IRA market -- the largest share among financial institutions, including commercial banks, thrifts, life insurance companies, and credit unions.
 The Vanguard Group of Investment Companies, headquartered in Valley Forge, manages 77 investment portfolios (more than 45 suitable for IRA investments) owned by some 4.5 million individual and institutional investors.
 -0- 12/9/93
 /CONTACT: Brian Mattes, 215-669-6219, or John Woerth, 215-669-6224, both of The Vanguard Group of Investment Companies/

CO: The Vanguard Group of Investment Companies ST: Pennsylvania IN: FIN SU:

MJ -- PH021 -- 2283 12/09/93 14:53 EST
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Publication:PR Newswire
Date:Dec 9, 1993

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