Fido Goes Cheapo

Price wars are nearly unheard of in the mutual-fund industry, but last week Fidelity Investments, run by Edward C. (Ned) Johnson III, right, cut expenses on five of its index mutual funds. The move, which follows other fee cuts, like the elimination of many funds' sales charges, was a direct swipe at index-fund leader Vanguard Group and a nod to the increasing popularity of exchange-traded funds--low-cost baskets of stock that track particular indexes and trade on stock exchanges. Expenses on the five funds, which are pegged to such benchmarks as the S&P 500 or the Wilshire 5000, are now just 0.10% of assets annually. Fidelity sells the funds directly and through many retirement plans.