Dear Jeanne,

I did some research on the Vanguard site on VWO and do not see any tax issues you’d have with this ETF that you wouldn’t be able to handle in bivio.  There will be a little extra accounting involved but it should be easy to handle.

It looks like you have the potential to have several different types of taxable income and issues to deal with each year that you hold this fund.

·         1.   Dividend Income-part of this will be qualified and you will  have to split your dividends into two entries at the end of the year.   From the Vanguard site, it looks like in 2009,  61.83% of the dividends paid could be considered Qualified (subject to the holding period check).   

https://personal.vanguard.com/us/insights/taxcenter/qdi/yearend-qualified-dividend-income-2009

The non-qualified portion of each dividend would be taxed at a higher rate.

·         2.   Foreign taxes-since the fund invests in foreign stock,  there may be foreign taxes that are withheld and would be reported to you at the end of the year.  Again,  it would be simple to enter this information in bivio.

·         2.   Capital gains -your fund will be trading stocks and may accumulate capital gains which will be distributed to you at the end of the year.    If so,  you will need to record this in bivio.

Note that holding a fund is one of the things which makes it take longer to receive brokerage 1099’s.  If your club members are the type who get antsy about receiving their K-1’s early,  holding this may make accommodating them a  little more complicated.

       Laurie Frederiksen