P.O. Box 2600
Valley Forge, PA 19482-2600
610-669-8439
christyn_l_rossman@vanguard.com
July 19, 2017
via electronic filing
Ms. Lisa Larkin
U.S. Securities & Exchange Commission 100 F Street, N.E.
Washington, DC 20549
RE: | Vanguard New Jersey Tax-Free Funds (the “Trust”) |
File No. 33-17351 | |
Post-Effective Amendment Number 50 |
Ms. Larkin, |
This letter responds to comments that you provided to us by telephone on July 10, 2017, regarding the |
above referenced post-effective amendment pertaining to the Vanguard New Jersey Tax-Exempt Funds |
(the “Funds”). Each comment is summarized below, followed by the response to the comment. |
Comment 1: | Prospectus – Fees and Expense – Vanguard New Jersey Municipal Money Market |
Fund | |
Comment: | In the Shareholder Fees table, please explain the meaning of the line item “Purchase |
Fee.” | |
Response: | Certain of the Vanguard funds have purchase and/or redemption fees; however, the New |
Jersey Municipal Money Market Fund does not have a purchase fee or a redemption fee. | |
“Purchase Fee” is a standard line item on this table across the Vanguard funds to make | |
investors aware of whether a particular fund has a purchase and/or redemptions fee. This | |
fee is not a sales charge or load because it is paid directly to the fund to offset the costs of | |
trading certain securities. As a fee charged based on the net asset value at the time of | |
purchase the placement of the “Purchase Fee” line is appropriate pursuant to Item 3 | |
Instruction 2(a) of Form N-1A. |
Comment 2: | Prospectus – Fees and Expenses – Vanguard New Jersey Municipal Money Market |
Fund | |
Comment: | Pursuant to Item 3 Instruction 3(e) of Form N-1A, please revise footnote 1 of the Annual |
Fund Operating Expenses table to comply with the Item or delete the footnote in its | |
entirety. | |
Response: | The footnote to the Annual Fund Operating Expenses is not a reference to a fee waiver |
nor an expense reimbursement, but rather included to explain why the Annual Fund | |
Operating Expenses reflected in the Fee Table are higher than the Annual Fund Operating | |
Expenses incurred during the Fund’s most recent fiscal year pursuant to Item 3 | |
Instruction 3(d)(ii) of Form N-1A. | |
Comment 3: | Prospectus – Average Annual Total Returns Table – Vanguard New Jersey |
Municipal Money Market Fund | |
Comment: | Pursuant to Item 4 Instruction 2(b) of Form N-1A, please explain in what manner the |
comparative benchmarks listed are appropriate within the meaning of the Form. | |
Response: | The SEC staff has previously recognized that disclosure of a broad-based securities |
market index is not necessarily useful for money market funds. The comparative | |
benchmarks are consistent with prior staff guidance that a money market fund may, if it | |
chooses, include information for other indexes, which would permit the use of a peer | |
group index pursuant to Item 27(b)(7) Instruction 6 of Form N-1A.1 | |
Comment 4: | Prospectus – Principal Investment Strategies – Vanguard New Jersey Long-Term |
Tax-Exempt Fund | |
Comment: | Please specify if the New Jersey Long-Term Tax-Exempt Fund has a duration policy, and |
if so, consider including additional disclosure in the investment strategy discussion. | |
Response: | The Fund does not have a specified duration policy and manages to the maturity policy |
disclosed in the Principal Investment Strategies. | |
Comment 5: | Prospectus – Principal Investment Strategies – Vanguard New Jersey Long-Term |
Tax-Exempt Fund | |
Comment: | Please explain how the New Jersey Long-Term Tax-Exempt Fund will invest the |
remaining 20% of its assets. | |
Response: | As disclosed in the Principal Investment Strategies, the Fund invests primarily in high- |
quality municipal bonds issued by New Jersey state and local governments, as well as by | |
regional governmental and public financing authorities. As of the fiscal period ended | |
November 30, 2016, the Fund had invested 97.6% of its net assets in municipal bonds | |
issued by New Jersey state and local governments, as well as by regional governmental | |
and public financing authorities. | |
The 80% policy disclosed in the Principal Investment Strategies sets forth the Fund’s | |
policy to comply with rule 35d-1, also known as the Names Rule. Under this policy, the | |
Fund may invest up to 20% in assets whose income is not exempt from federal and New | |
Jersey state taxes. The assets that the Fund may invest in including within this 20% are |
1Letter to Craig S. Tyle, Esq., General Counsel, Investment Company Institute, from Barry D. Miller, Associate Director, Division of Investment Management, Securities and Exchange Commission (October 2, 1998) available athttps://www.sec.gov/rules/other/ici1002.txt.
further limited by the non principal investment strategies disclosed under the Security | |
Selection subheading of the prospectus. | |
Comment 6: | Prospectus – Investing in Money Market Funds – Vanguard New Jersey Municipal |
Money Market Fund | |
Comment: | Pursuant to Adopting Release IC- 31166, please clarify that the liquidity fee imposed |
when weekly liquid assets fall below 30% may be implemented as early as the same day | |
that board determination to impose the fee is made. In contrast, please disclose that a | |
default liquidity fee implemented in the event that weekly liquid assets fall below 10% | |
must be implemented at the start of the following business day after the board | |
determination. | |
Response: | We have added the requested disclosure. |
Comment 7: | Prospectus – Investing in Money Market Funds – Vanguard New Jersey Municipal |
Money Market Fund | |
Comment: | Please clarify that exchanges will not be processed if there is a redemption gate and that |
investors will need to submit a new exchange request. | |
Response: | We have added the requested disclosure. |
Comment 8: | Prospectus – Investing in Money Market Funds – Vanguard New Jersey Municipal |
Money Market Fund | |
Comment: | Please confirm whether you will allow exchanges once a liquidity fee is in place. |
Response: | We have clarified the requested disclosure. |
Comment 9: | Prospectus – Investing in Money Market Funds – Vanguard New Jersey Municipal |
Money Market Fund | |
Comment: | Please describe the use of fee proceeds by the New Jersey Municipal Money Market |
Fund, including any possible return to shareholders in the form of a distribution. | |
Response: | We have clarified the relevant disclosure under the Basic Tax Points subheading of the |
prospectus. | |
Comment 10: | Prospectus – Investing in Money Market Funds – Vanguard New Jersey Municipal |
Money Market Fund | |
Comment: | Please provide a general description of the process of fund liquidation if the New Jersey |
Municipal Money Market Fund’s weekly liquid assets fall below 10% and the board | |
determines that it would not be in the best interest of the Fund to continue operating. | |
Response: | We have added the requested disclosure. |
Comment 11: | Prospectus – Security Selection – Vanguard New Jersey Long-Term Tax-Exempt |
Fund | |
Comment: | Please clarify if investment in non-investment-grade securities is intended to be a |
principal investment strategy of the New Jersey Long-Term Tax-Exempt Fund and if so, | |
consider adding disclosure to the Principal Investment Strategies section. | |
Response: | The Fund does not intend to invest in non-investment-grade securities as part of its |
principal investment strategy. |
Comment 12: | Prospectus – Back Cover Page – the Trust |
Comment: | Pursuant to Item 1(b)(4) of Form N-1A, please confirm that the Trust’s Investment |
Company Act file number is in type size smaller than that generally used in the | |
prospectus (e.g., 8-point modern type). | |
Response: | We confirm that the Trust’s Investment Company Act file number on the back cover page |
is in type size smaller than that generally used in the prospectus. | |
Comment 13: | SAI – Investment Strategies, Risks, and Nonfundamental Policies |
Comment: | In the OTC Swap Agreements policy, please explain in respect to the use of credit default |
swaps whether a Fund will segregate the full notional amount of the swap if it defaults. | |
In addition, please acknowledge that in respect to the use of total return swaps a new | |
derivatives rule could be issued in the future that may impact the manner in which a Fund | |
operates in relation to total return swaps. | |
Response: | We confirm in the event that a Fund sells credit default swaps that a Fund segregates |
assets equal to the full notional amount of the credit default swap. | |
We acknowledge that a new derivatives rule could be issued in the future that may impact | |
the manner in which a Fund segregates assets in relation to total return swaps. | |
Comment 14: | SAI – Ownership of Fund Shares – Control Persons |
Comment: | Pursuant to Item 18(a) of Form N-1A, please confirm that the Funds will comply with the |
Item for any person who controls each Fund. | |
Response: | We confirm that the Funds will comply with Item 18(a) and disclose any control persons |
of each Fund as of 30 days prior to filing the definitive registration statement. |
Please contact me at (610) 669-8439 with any questions or comments regarding the above responses. Thank you.
Sincerely,
/s/Christyn L. Rossman
Christyn L. Rossman
Senior Counsel
The Vanguard Group, Inc.