Products August 23, 2007

Vanguard to Take Control of Long/Short Fund

The Vanguard Group has announced a proposal with Charles Schwab Investment Management to reorganize the Laudus Rosenberg U.S. Large/Mid Capitalization Long/Short Equity Fund into a new Vanguard offering.
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A Vanguard news release said the company 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. The two share classes will feature estimated expense ratios of 0.75% and 0.60%, respectively.

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, according to the release. Vanguard Quantitative Equity Group would also manage a portion of the fund.

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Laudus Rosenberg Fund shareholders are expected to be mailed a proxy statement detailing the terms of the proposed reorganization in early October. If approved at a special shareholder meeting scheduled for mid-November, the tax-free reorganization is expected to be completed by year-end 2007, according to Vanguard.

Along with the reorganization proposal, Vanguard has filed a registration statement with the U.S. Securities and Exchange Commission (SEC) for the new 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.

The new fund will assess a 1% fee on shares redeemed within one year of purchase, which is half the current charge on shares redeemed within 30 days of purchase, Vanguard said.

The Markets August 23, 2007

S&P Sets Index Sights on the 'Stars'

Standard&Poor’s has launched two indexes providing investors with exposure to the top stock picks of Standard&Poor’s Equity Research analysts in Europe and the United States.
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The S&P U.S. STARS Index and the S&P Europe STARS Index are designed to measure the performance of stocks within the S&P Composite 1500 (U.S. STARS) and S&P Europe 350 (Europe STARS) currently ranked 5-STARS or 4-STARS out of five by Standard & Poor’s Equity Research Services, an S&P news release explained.

The announcement said U.S. and European equities ranked 5-STARS/”Strong Buy” or 4-STARS/”Buy” by Standard & Poor’s Equity Research Services analysts are expected to outperform the S&P 500 and S&P Europe 350, respectively.

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S&P said while both indexes are comprised primarily of 5-STARS stocks, they may also include 4-STARS stocks when certain conditions warrant. Both indexes are equal-weighted, with constituents reviewed and re-weighted every month.

Under proprietary STARS (Stock Appreciation Ranking System) methodology, S&P equity analysts rank stocks according to their individual forecast of a stock’s future total return potential versus the expected total return of a relevant benchmark based on a 12-month time horizon, the company said.

More information about S&P STARS is at www.equityresearch.standardandpoors.com.

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