I need a mutual fund expert for this expense ratio question!?

Vanguard Target Retirement 2015 fund has an expense ratio of .21%. I was trying to find out if the expense ratios of the underlying funds were also being charged on top of the .21%.

I called a Vanguard rep who said I wouldn't be charged the underlying funds expenses. So I ordered a prospectus and it states "..... fund may charge for its own direct expenses, in addition to bearing a proportionate share of expenses charged by the underlying funds..." It "may charge" so does it?
I checked morningstar and next to the expense ratio % it notes "includes underlying expense".

On $10,000, .21% expense ratio would cost $21 annually. If you add the expense ratios of the underlying funds, $10,000 will cost $41.54 annually. Its not much but I'm going nuts trying to figure it out.

Is the expense ratio of funds deducted annually, quarterly, or does it vary? Is that info in the prospectus? Thanks.

It appears that the .21% ratio is in fact the fee for this fund. The expense ration is deducted daily. The underlying funds are already absorbing the main charges, and the target fund only holds certain percentages of the underlying funds. Not sure if this info. is in the prospectus (daily fee deductions), but it the way NAV is calculated. 1/360 of the fee per day.

Gregg

The E.R. for the 2015 fund includes the apportioned E.R. for the underlying funds. There is no "added" expense on top of those. The E.R. is not deducted from each account in a discrete transaction. It is factored into the total return of the fund.