Caveat Emptor Index xxxvii

Part I Building Blocks 1

Chapter One The Rewards of Investing 3

Chapter Two The Risks of Investing 24

Chapter Three Mutual Funds: Principles, Practicalities, Performance 48

Part II Mutual Fund Selection 65

Chapter Four How To Select A Common Stock Mutual Fund 67

Chapter Five How To Select A Bond Mutual Fund 97

Chapter Six How To Select A Money Market Fund 120

Chapter Seven How To Select A Balanced Mutual Fund 135

Chapter Eight Where To Get Mutual Fund Information 147

Part III New Perspectives On Three Key Issues 167

Chapter Nine Index Funds 169

Chapter Ten Mutual Fund Costs 190

Chapter Eleven Taxes and Mutual Funds 209

Part IV Practical Application of Investment Principles 233

Chapter Twelve The Allocation of Investment Assets 235

Chapter Thirteen Mutual Fund Model Portfolios 259

Chapter Fourteen A Mandate For Fund Shareholders 280

Epilogue Twelve Pillars of Wisdom 303

Notes 308

Index 311

John Bogle—investment giant and founder of the Vanguard Group of mutual funds—­offers a hands-on guide for creating a long-term investment program that can be tailored to any investor’s financial goals. Written in down-to-earth terms for investors at any level, Bogle on ­Mutual Funds: New Perspectives for the Intelligent Investor explores the rewards of investing, the inherent investment risks, and the pitfalls to avoid. Drawing on his years of investment wisdom and success, Bogle outlines the time-tested principles and practicalities of investing through mutual funds.

At the heart of Bogle’s analysis are three “New Perspectives” on key investment issues. When the first edition of Bogle on Mutual Funds was published in 1993, these topics had not been given much attention in financial literature. Today, however, these ideas are firmly in the mainstream of investing’s conventional wisdom. Those three new perspectives—index funds, mutual fund costs, and taxes and mutual funds—remain critically important topics for mutual fund investors to consider. Bogle shows the way to intelligently navigate these issues in order to maximize your chances for investment success.

Bogle’s approach to mutual fund investing offers an effective method for developing a broadly diversified investment program. Step by step, he shows how to develop a long-term and strategic investing approach that balances the myriad market risks and shows how to manage the bumps along the volatile road of the marketplace. With Bogle on your side, you can learn how to spot excessive fees, reduce taxes, steer clear of overblown advertising claims, and ultimately create a portfolio that will meet your own financial objectives.

Bogle on Mutual Funds gives investors the keys to adopting an effective asset allocation strategy, selecting appropriate mutual funds, and employing the savvy use of index funds. Fundamental to the Bogle approach is an understanding of the role of the many costs of investing, including advisory fees, operating expenses, and sales charges. Return, risk, and cost are the three legs of Bogle’s eternal triangle of investing.

John Bogle has built his acclaimed mutual fund company on the fundamental principles of candor, fairness, and low cost. Bogle on Mutual Funds: New Perspectives for the ­Intelligent ­Investor, his first book, has become a classic. The framework it presents for creating an ­investment portfolio is well grounded in Bogle’s fact-founded wisdom and guiding ­principles, proven over and over again during the near-quarter-century since its first publication in 1993.