Growth of unrealized gains in tax-managed index funds
I don't know that I can answer the question fully, but 2 points. The percent that represent capital gains certainly can't exceed 100. Did you mean 50% but the 500% is a typo?  More important, funds held in retirement accounts have no issue with this, Cap Gains are meaningless within tax deferred accounts. I don't know the ratio of stocks held in these accounts vs outside, just that the 2011 year end total retirement account worth was $17 trillion. (That's 12 zeros) This strikes me as a high ratio, although more numbers digging is in order. Right now, the unrealized appreciation of Vanguard Tax-Managed   Small-Cap Fund Admiral Shares is 28.4% of NAV. As long as the fund   delivers decent returns over the long term, is there anything stopping   this amount from ballooning to, say, 90% fifty years hence? I'd have a heck of a time imagining how this grows to that high a number realistically.  The inflows and outflows of the fund are a bigger question along with what kinds of changes are there to capital gains that may make the fund try to hold onto the stocks longer and minimize the tax burden. If this happens, won't new investors be scared away by the prospect of   owing taxes on these gains? For example, a financial crisis or a   superior new investment technology could lead investors to dump their   shares of tax-managed index funds, triggering enormous capital-gains   distributions. And if new investors are scared away, won't the fund be   forced to sell its assets to cover redemptions (even if there is no   disruptive event), leading to larger capital-gains distributions than   in the past? Possibly but you have more than a few assumptions in this to my mind that I wonder how well are you estimating the probability of this happening. Finally, do ETFs avoid this problem (assuming it is a problem)? Yes, ETFs have creation and redemption units that allow for in-kind transactions and thus there isn't a selling of the stock.  However, if one wants to pull out various unlikely scenarios then there is the potential of the market being shut down for an extended period of time that would prevent one from selling shares of the ETF that may or may not be as applicable as open-end fund shares. I would however suggest researching if there are hybrid funds that mix open-end fund shares with ETF shares which could be an alternative here.
The expense fees are high, and unfortunate. I would stop short of calling it criminal, however.  What you are paying for with your expenses is the management of the holdings in the fund. The managers of the fund are actively, continuously watching the performance of the holdings, buying and selling inside the fund in an attempt to beat the stock market indexes. Whether or not this is worth the expenses is debatable, but it is indeed possible for a managed fund to beat an index.  Despite the relatively high expenses of these funds, the 401K is still likely your best investment vehicle for retirement. The money you put in is tax deductible immediately, your account grows tax deferred, and anything that your employer kicks in is free money.  Since, in the short term, you have little choice, don't lose a lot of sleep over it.  Just pick the best option you have, and occasionally suggest to your employer that you would appreciate different options in the future. If things don't change, and you have the option in the future to rollover into a cheaper IRA, feel free to take it. "A 'indexed guaranteed income certificate' (Market Growth GIC) fits the criteria defined in the OP. The ""guaranteed"" part of the name means that, if the market falls, your capital is guaranteed (they cover the loss and return all your capital to you); and the ""index linked"" or ""market growth"" means that instead of the ROI being fixed/determined when you buy the GIC, the ROI depends on (is linked to) the market growth, e.g. an index (so you get a fraction of profit, which you share with the fund manager). The upside is that you can't 'lose' (lose capital). The fund manager doesn't just share the losses with you, they take/cover all the losses. The downside is that you only make a fraction of whatever profit you might make by investing directly in the market (e.g. in an index fund). Another caveat is that you buy a GIC over some fixed term, e.g. you have to give them you money for a year or more, two years." Immediately move your Roth IRA out of Edward Jones and into a discount broker like Scottrade, Ameritrade, Fidelity, Vanguard, Schwab, or E-Trade.  Edward Jones will be charging you a large fraction of your money (probably at least 1% explicitly and maybe another 1% in hidden-ish fees like the 12b-1).  Don't give away several percent of your savings every year when you can have an account for free.  Places like Edward Jones are appropriate only for people who are unwilling to learn about personal finance and happy to pay dearly as a result.  Move your money by contacting the new broker, then requesting that they get your money out of Edward Jones.  They will be happy to do so the right way.  Don't try and get the money out yourself. Continue to contribute to your Roth as long as your tax bracket is low.  Saving on taxes is a critically important part of being financially wise.  You can spend your contributions (not gains) out of your Roth for any reason without penalty if you want/need to.  When your tax bracket is higher, look at traditional IRA's instead to minimize your current tax burden.  For more accessible ways of saving, open a regular (non-tax-advantaged) brokerage account. Invest in diversified and low-cost funds.  Look at the expense ratios and minimize your portfolio's total expense.  Higher fee funds generally do not earn the money they take from you. Avoid all funds that have a nonzero 12b-1 fee. Generally speaking your best bet is buying index funds from Fidelity, Vanguard, Schwab, or their close competitors.  Or buying cheap ETF's.   Any discount brokerage will allow you to do this in both your Roth and regular accounts.  Remember, the reason you buy funds is to get instant diversification, not because you are willing to gamble that your mutual funds will outperform the market.  Head to the bogleheads forum for more specific advice about 3 fund portfolios and similar suggested investment strategies like the lazy portfolios.  The folks in the forums there like to give specific advice that's not appropriate here. If you use a non-tax-advantaged account for investing, buy and sell in a tax-smart way.  At the end of the year, sell your poor performing stocks or funds and use the loss as a tax write-off.  Then rebalance back to a good portfolio.  Or if your tax bracket is very low, sell the winners and lock in the gains at low tax rates.  Try to hold things more than a year so you are taxed at the long-term capital gains rate, rather than the short-term. Only when you have several million dollars, then look at making individual investments, rather than funds.  In a non-tax-advantaged account owning the assets directly will help you write off losses against your taxes.  But either way, it takes several million dollars to make the transactions costs of maintaining a portfolio lower than the fees a cheap mutual/index fund will charge. Sedar is I guess the Canadian equivalent of EDGAR. You can find the company's filings there.  Here's a picture from their filings. Can't post the link, if you go and find the filing through Sedar you'll know why (it's not as nice a site as EDGAR). The 4.8 million is from unrealized gain on biological assets. So that's what it is. The reason, I think, as to why Operating Income is a positive 2.67 even though Operating Expense and Gross Profit are both negative is because Google Finance backed into Operating Expense. Operating Income is the same between the two sources, it's just the unrealized gain that moves. "Your objectives are contradictory and/or not possible. Eliminating the non-taxable objective: You could divide the $100K in 5 increments, making a ""CD ladder"" $25K in 3mo CD (or savings a/c) $25K in 6 mo CD $25K in 9mo CD $25K in 1 yr CD or similar structure (6mo also works well) Every maturing CD you are able to access cash and/or invest in another longest maturity CD, and earn a higher rate of interest. This plan also works well to plan for future interest rates hikes. If you are forced to access (sell CD's)  ALL the $$$ at any time, you will only lose accrued interest, none of the principal.  All FDIC guaranteed. If non-taxable is the highest priority, ""invest"" in a tax-free money market fund....see Vanguard Funds. You will not have FDIC guarantee." You are still selling one investment and buying another - the fact that they are managed by the same company should be irrelevant.  So yes, it would get the same tax treatment as if they were managed by different companies. The methodology for divisor changes is based on splits and composition changes. Dividends are ignored by the index. Side note - this is why, in my opinion, that any discussion of the Dow's change over a long term becomes meaningless. Ignoring even a 2% per year dividend has a significant impact over many decades.  The divisor can be found at http://wsj.com/mdc/public/page/2_3022-djiahourly.html I think you are mixing up forward looking statements with the actual results. The funds objective   The fund invests primarily in stocks that tend to offer current dividends. It focuses on high-quality companies that have prospects for long-term total returns as a result of their ability to grow earnings and their willingness to increase dividends over time Obviously in 1993 quite a few companies paid the dividends and hence VDIGX was able to give dividends. Over the period of years in some years its given more and in some years less. For example the Year 2000 it gave $ 1.26, 1999 it gave $ 1.71 and in 1998 it gave $ 1.87 The current economic conditions are such that companies are not making huge profts and the one's that are making prefer not to distribute dividends and hold on to cash as it would help survive the current economic conditions. So just to clarify this particular funds objective is to invest in companies that would give dividends which is then passed on to fund holders. This fund does not sell appreciated stocks to convert it into dividends.