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 Funds 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 Funds | |
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 |
1 Letter 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 at https://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 Funds 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 Trusts 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 Trusts 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.