FOR IMMEDIATE RELEASE
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CONTACT:
JOHN S. WOERTH
610.669.6224
REBECCA COHEN
610.503.2273
AMY CHAIN
610-669-2149
VANGUARD PLANS TO ADOPT LAUDUS ROSENBERG EQUITY FUND
VALLEY FORGE, PA, August 22, 2007 - The Vanguard Group today announced a
proposal with Charles Schwab Investment Management to reorganize the Laudus
Rosenberg U.S. Large/Mid Capitalization Long/Short Equity Fund (RMNIX) into a
new Vanguard(R) fund. The $21 million open-end fund, which is a member of
Schwab's Laudus family of funds, is sub-advised by AXA Rosenberg Investment
Management LLC.
Shareholders of the Laudus Rosenberg Fund are expected to be mailed a proxy
statement detailing the terms of the proposed reorganization in early October. A
special shareholder meeting is scheduled for mid-November. If approved, the
tax-free reorganization is expected to be completed by year-end 2007.
In conjunction with the reorganization proposal, Vanguard has filed a
registration statement with the U.S. Securities and Exchange Commission for
Vanguard Market Neutral Fund. The new no-load fund will seek to provide
long-term capital appreciation while limiting exposure to general stock market
risk by using a long/short market-neutral strategy.
AXA Rosenberg would continue to serve as an investment advisor of the
reorganized fund. Vanguard Quantitative Equity Group would also manage a portion
of the fund.
"We view the adoption of the fund as an opportunity to expand our
relationship with a respected advisor and bring a new investment strategy to our
institutional clients through a relatively low-cost fund with an established
track record," said Vanguard CEO Jack Brennan.
In June, Vanguard added AXA Rosenberg to the advisory teams of the $12
billion Vanguard(R) Explorer(TM) Fund and the $1.4 billion Vanguard U.S. Value
Fund. AXA Rosenberg manages 12% of the Explorer Fund and 50% of the U.S. Value
Fund.
Vanguard expects the new Market Neutral Fund to appeal primarily to
institutional investors, particularly endowments and foundations. The fund will
require minimum initial investments of $250,000 for Investor Shares and $5
million for Institutional Shares.
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VANGUARD TO ADOPT FUND PAGE 2 OF 3
"We have considerably expanded our product offerings and advisory services
to institutional clients over the past several years," said Mr. Brennan, who
noted that Vanguard's institutional offerings now include structured equity
funds and target retirement commingled trusts. Vanguard also plans to introduce
an extended-duration U.S. Treasury index fund next month.
Vanguard Market Neutral Fund will offer two share classes, Investor Shares
and Institutional Shares, which will feature estimated expense ratios of 0.75%
and 0.60%, respectively. The Laudus Rosenberg fund currently has expense ratios
of 1.54% and 1.24% (after fee waivers) for the respective Investor and
Institutional Shares, including a 12b-1 fee of 0.25% on Investor shares that
will not be charged by the new fund. The average expense ratio for funds in the
long/short category is 1.97%, according to Morningstar, Inc. (Note: All of these
expense figures are net of dividend expenses associated with the shorting
strategy of long/short funds, which can add 100 to 150 basis points to total
annual operating expenses.)
The new fund will assess a 1% fee on shares redeemed within one year of
purchase, which is half the current 2% fee on shares redeemed within 30 days of
purchase.
AXA Rosenberg Group LLC, an AXA Investment Managers Company, was founded in
1985 by Drs. Barr Rosenberg and Kenneth Reid. As of July 31, 2007 AXA Rosenberg
managed $137 billion in individual country, regional and global strategies for
pension funds, foundations and government entities in the Americas, Europe, Asia
and Japan. Headquartered in Orinda, California, the firm has offices in
Greenwich, Connecticut, Toronto, London, Tokyo, Hong Kong, Singapore and Sydney.
Vanguard Quantitative Equity Group oversees $25 billion in active
quantitative equity fund assets. The group serves as the sole investment advisor
to six actively manage funds--the Strategic Equity Fund, the Strategic Small-Cap
Equity Fund, and four structured equity funds--and manages portions of six other
actively managed funds.
The long/short market-neutral strategy to be employed by the new fund is an
absolute-return investment approach that seeks performance exceeding the returns
of 3-month U.S. Treasury bills. Each advisor will independently buy securities
it considers to be undervalued and sell short an approximately equal dollar
amount of securities deemed overvalued. The overall return of the fund will
depend on the net performance of its long and short positions. The fund's goal
is to produce long-term capital appreciation that reflects the quality of the
advisors' security selections, with limited correlation to the returns of the
U.S. stock market as a whole.
The Vanguard Group, headquartered in Valley Forge, Pennsylvania, is the
nation's second-largest mutual fund firm and a leading provider of
company-sponsored retirement plan services. Vanguard manages more than $1.2
trillion in U.S. mutual fund assets, including more than $325 billion in
employer-sponsored retirement plans. Vanguard offers more than 140 funds to U.S.
investors and more than 40 additional funds in foreign markets.
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VANGUARD TO ADOPT FUND PAGE 3 OF 3
A registration statement relating to Vanguard Market Neutral Fund has been
filed with the Securities and Exchange Commission but has not yet become
effective. These securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes effective.
The Vanguard Market Neutral Fund is being formed through the proposed
reorganization of an existing fund known as Laudus Rosenberg U.S. Large/Mid
Capitalization Long/Short Equity Fund. Shareholders of the Laudus Rosenberg
Fund may or may not approve the reorganization proposal. If the proposal is
not approved by shareholders, the registration statement previously filed
for Vanguard Market Neutral Fund will be withdrawn.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of, these
securities in any state in which such offer, solicitation, or sale would be
unlawful prior to registration or qualification under the securities laws
of any such state.
A combined proxy statement/prospectus relating to the proposed
reorganization of Laudus Rosenberg U.S. Large/Mid Capitalization Long/Short
Equity Fund has been filed with the U.S. Securities and Exchange Commission
but has not yet become effective. Both the registration statement for
Vanguard Market Neutral Fund and the combined proxy statement/prospectus
(SEC File No. 811-22114) contain important information for investors and
may be obtained without charge from the SEC's web site (www.sec.gov).
# # # VR-736
All asset figures are as of July 31, 2007, unless otherwise noted.
For more information, visit www.vanguard.com, or call 800-662-7447 to obtain a
fund prospectus. Investment objectives, risks, charges, expenses, and other
important information about a fund are contained in the prospectus; read and
consider it carefully before investing.
Copies of the Vanguard Market Neutral Fund and Vanguard Extended Duration
Treasury Index Fund prospectuses, as well as prospectuses for all other Vanguard
funds can be obtained by calling 800-662-7447. Investment objectives, risks,
charges, expenses, and other important information about a fund are contained in
these documents; read and consider them carefully before investing. Please note
that a preliminary prospectus is subject to change.
Registration statements relating to the Vanguard Market Neutral Fund and
Vanguard Extended Duration Treasury Index Fund have been filed with the
Securities and Exchange Commission but have not yet become effective.
Investments are subject to risk. Investments in bond funds are subject to
interest rate, credit, and inflation risk. Prices of mid-cap stocks often
fluctuate more than those of large-company stocks.
A short sale is the sale of a security that the seller does not own, usually to
take advantage of an expected drop in the price. The short seller typically
borrows the security from a broker-dealer and delivers it to the purchaser. The
short seller later closes out the short position by returning the security to
the lender, usually by purchasing it on the open market. The Fund's use of short
sales in combination with its long positions in an attempt to improve
performance or to reduce overall portfolio risk may not be successful and may
result in greater losses or lower positive returns than if the Fund held only
long positions. The Fund's loss on a short sale is potentially unlimited because
there is no upward limit on the price a borrowed security could attain. Short
selling also involves high transaction costs.
Vanguard and Explorer are trademarks of The Vanguard Group, Inc.
All other marks are the exclusive property of their respective owners.
Vanguard Marketing Corporation, Distributor.